Ad plunge forces C4 to cut budget by £75m

Channel 4 has warned that the plunge in advertising revenues could force it to cut its commissioning budget by up to £75m this year.

Andy Duncan, chief executive of C4, said yesterday that the advertising slump had already prompted £25m worth of cuts to the programming budget in 2008. In total, the cuts will hit the "thick end of £100m" by the end of this year. Mr Duncan added that producing the same level of quality programmes would be increasingly difficult as spending was slashed.

Media companies have suffered as advertising has plunged. Mr Duncan said: "Since Lehman Brothers, the advertising market has collapsed. There has been a dramatic change. Traditional media businesses are under unprecedented pressure. I don't think the models are broken but we have to adapt."

He said that the TV advertising market was down 17 per cent in the first quarter and predicted a total 15 per cent fall for the entire year. This has added further pressure for the broadcaster to secure a deal to tackle the £150m funding gap it faces from 2012. "You can keep taking costs out, but there's not much more to give," Mr Duncan added.

C4 remains in discussions over a potential joint venture with the BBC's commercial arm, Worldwide, to solve the shortfall. Mr Duncan said the talks were "going well. The broad concept of a significant partnership has real potential". He once more dismissed a tie-up with Channel Five. There will be more clarity on C4's future when Lord Carter publishes his Digital Britain report, with recommendations for the broadcaster next month.

The group posted a surplus of £1.8m despite lower revenues, as its headcount reduction and budget cuts took effect. Most managers also turned down a bonus. It has been a successful year, as the broadcaster has won more awards than any of its UK rivals and increased its peak-time viewers. It has been feted for programmes including Skins, Peep Show and Red Riding.