The Big Question: What's gone wrong at Channel 4, and where does it go from here?

Why are we asking this now?

Channel 4's chief executive, Andy Duncan, is on the verge of quitting after five years in the post, effectively admitting defeat in his long-running campaign to put the broadcaster on a sound financial footing beyond 2012, when the analogue signal is switched off and the channel is forced to fight for audience share and advertising revenue in a solely digital world.

Wasn't Duncan's departure expected?

His imminent departure is an open secret in the broadcasting industry and was the subject of intense speculation at the recent Edinburgh International Television Festival. Though he told Edinburgh delegates that "there is nothing to add", few were convinced and his comment that "there has been rumour and speculation for the last five years" only served as a reminder of his turbulent time in the post. His attempts to secure government funding for Channel 4's future – filling a post-switch-off shortfall in advertising revenue which he has frequently cited as £150m a year – have hit a brick wall.

He had high hopes of a joint venture deal with BBC Worldwide, the corporation's commercial arm, but talks have recently foundered. Duncan has struggled to obtain indirect government support to replace the value of the analogue spectrum and safeguard public service programming such as Channel 4 News and the acclaimed documentary strand Dispatches. The Channel 4 chairman, Luke Johnson, who is himself required to step down in January at the end of his six-year appointment by Ofcom, the broadcasting watchdog, has become increasingly convinced that Duncan should no longer occupy his £585,000-a-year job.

Why was he appointed?

He arrived at Channel 4 as a surprise appointment, a marketing man with little experience of making television programmes, and was mocked by television industry snobs as the man behind Flora margarine and Batchelors Supernoodles.

In fact, the skills Duncan learnt at Unilever, a hothouse in branding, had brought him to the attention of the BBC, where as head of marketing he showed a remarkable intuition for the potential of digital media and made a success of the Freeview digital terrestrial television project, of which he was chairman. Heralding his appointment at Channel 4, a delighted Johnson said "Andy is the brightest media executive of the Channel 4 generation." But such warmth in their relationship wasn't to last.

What went wrong?

Duncan was a fervent champion of public service media. Endlessly enthusiastic, he eschewed the hierarchical message of suits and ties and sat at an open plan desk as he encouraged colleagues to help realise his vision for Channel 4's multimedia future. After work he played football with his church team. Johnson, who worked out of the Fitzrovia office of his private equity company, in another part of London, was a more reserved character, a hardened capitalist and serial entrepreneur behind the Pizza Express, Border books, Giraffe and Patisserie Valerie chains, among others.

For a time, things appeared to be going well and the channel appeared in rude health, reporting pre-tax profits of £66.8m in 2005. But Duncan's wider dreams for Channel 4 began to unravel as plans for Channel 4 Radio and an adventure into magazine publishing had to be shelved. There were also numerous programming scandals which, although the channel claimed they fulfilled its remit for making challenging shows, also prompted questions over the suitability of the broadcaster's leadership.

What were these scandals?

Channel 4 enraged environmentalists and scientists by broadcasting The Great Global Warming Swindle in 2007, challenging the notion that carbon dioxide produced by human activity is the main cause of climate change. Ofcom, the broadcasting watchdog, criticised Channel 4 for breaching the broadcasting code. The broadcaster also enraged sections of the Muslim community and the West Midlands Police over the investigation Undercover Mosque, though Ofcom found that it was "a legitimate investigation uncovering matters of important public interest."

The broadcaster then upset Kensington Palace and the royal princes over the Diana: Witnesses in the Tunnel documentary, though many TV critics applauded the film. But by far the greatest controversy was caused by Big Brother, after the broadcast of fighting in series five (days before Duncan's arrival), sex scenes in the house swimming pool in series six and racist comments in series eight.

Most spectacularly, the bullying of Bollywood actress Shilpa Shetty in the 2007 Celebrity Big Brother prompted demonstrations on the streets in India and an apology from Gordon Brown. Duncan's attempts to defend the show at the Oxford Media Convention led to calls for him to consider his position.

How important was Big Brother?

It was crucial to Channel 4's financial stability, with an audience that at times touched eight million generating advertising money that – as C4 executives repeatedly pointed out – paid for more worthy but less popular programming. But the channel increasingly came to be defined by the show, harming its reputation for originality and serious content.

Last month, Channel 4 announced the show would be dropped next year meaning that, though audiences have fallen away, a valuable source of summer revenue has been lost. Channel 4 director of television Kevin Lygo used the occasion to say it was time for the broadcaster to "move on". The head of Channel 4, Julian Bellamy, said the show's demise would allow for "the most fundamental creative overhaul in our history". Both comments could be taken to read that the Duncan-Johnson era was coming to an end.

Haven't there been successes?

Undoubtedly. Channel 4 under Duncan and Johnson has established a strong family of channels that is the envy of rivals, with E4 attracting a younger audience and More4 winning a high reputation for its factual programme-making. Analysts are now predicting a sharp rise in revenues for Channel 4's 4oD on-demand service. The broadcaster's movie making arm, Film 4, has been astonishingly successful, winning a clutch of Oscars for Slumdog Millionaire and producing other hits such as The Last King of Scotland and This is England.

Who is in the frame to replace Duncan?

Near the front of the queue is Peter Fincham, the director of television at ITV and the former controller of BBC1. When Duncan was hired back in 2004, Fincham, then the rich and highly successful head of Talkback Thames, the independent production company, was hotly-tipped to take the job.

Also in the frame are the current Ofcom chief Ed Richards, who is looking for a new role, and his predecessor, Lord Carter, who recently produced the Digital Britain report for the Government on the future of media. Another possible candidate is Jana Bennett, the director of vision at the BBC.

Might Channel 4 be in danger of collapsing altogether?

Yes...

* As Ofcom struggles to identify a new chairman, they can ill afford to lose its chief executive as well

* Channel 4 may not find it easy to replace Duncan at a terrible time for the television industry

* The channel has failed to make the case that it should be regarded as an integral part of British broadcasting

No...

* Five years is a good enough stint; with the chairman also leaving, a new broom may be a good thing

* It's in better shape than Channel Five or ITV and it's financial shortfall may be exaggerated at £150m

* If ITV's Peter Fincham gets the job, Channel 4 will have the man many programme makers wanted originally

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