Channel 5 recorded a loss of pounds 23m in its first three months on top of the pounds 215.5m of start-up costs which have already been written off by its four shareholders.
The figures were released yesterday along with half-year results from United News & Media, which owns a 29 per cent stake in Channel 5. Its share of the first three months' losses was pounds 6.7m.
The channel, whose launch was dogged by problems, now reaches 65 per cent of the country. Its audience share is 5 per cent in homes that can access it and 3 per cent nationwide.
Support from advertisers has been encouraging with annualised revenues running at pounds 85m. This is much higher than even the top end of City expectations and will reassure analysts who have expressed concerns that Channel 5 would prove a financial black hole. "We are slightly ahead of our expectations," said the company's chief executive, Lord Hollick.
On the basis of yesterday's figures, broker Henderson Crosthwaite has lowered its forecast of first-year losses from pounds 25m to pounds 20m.
Excluding Channel 5 losses, United News & Media recorded a 15 per cent increase in half-year profits to pounds 174m. Lord Hollick yesterday repeated his call for a fairer system on the way broadcasters were taxed.
He said licence fees paid to the Treasury by the ITV companies could be replaced by a tax on advertising and subscription revenues. This would extend the tax to include satellite broadcaster BSkyB. "Our view is that the tax should be levied fairly and evenly," he said. "There needs to be a fundamental review."
Lord Hollick's comments came as the Independent Television Commission is consulting on the issue. It has asked for industry reaction by 27 September. United News & Media, which was formed as a result of MAI's merger with United News last year, is making progress with operating margins which rose from 15.4 per cent to 18 per cent.
After a year of busy corporate activity, in which United made pounds 1.1bn worth of acquisitions and pounds 400m of disposals, Lord Hollick said the focus this year would switch to organic growth.
The review of HTV, for which United paid pounds 372m earlier this year, will be completed by the end of this month. Cost savings will be reinvested across the group. Business Services, the exhibitions and trade magazine division which now accounts for 45 per cent of group profits, saw improved performances from Miller Freeman, which now includes the Blenheim Exhibitions group. Profits in the division rose by 70 per cent to pounds 87m.
The consumer publishing arm, which includes the Express newspaper titles, increased underlying profits by 18 per cent to pounds 48m.
Lord Hollick said investment in the Express would continue. With pounds 10m invested so far since the MAI-United merger, a further pounds 10m will be spent on the paper "over the next year or two".
Lord Hollick said the move towards a seven-day operation had worked well but more funds would be invested in the Sunday title.
"We are going to give the Mail a real run for its money over the next five years," he said.
The falling cost of newsprint boosted the group's bottom line by pounds 10m but currency factors cost the group pounds 5m while the rest was offset by development activity.
The financial services division, which includes the money-broking operation, saw profits fall by 13 per cent to pounds 27.5m.
Group margins improved from 15 per cent to 18 per cent. Net debt stands at pounds 1bn. The interim dividend is 11p. The shares rose 27.5p to 746p.