Job cuts help put Channel 4 in profit

A streamlined Channel 4 announced yesterday that it had turned a £28m annual loss into a profit of £16.5m after laying off staff and scaling down its film production unit.

Mark Thompson, the chief executive, said Channel 4 had enjoyed "a year of progress" in 2002 but said he was disappointed by the performances of the breakfast programme RI:SE and the lavish Saturday night show Boys and Girls. Channel 4 increased turnover by 4 per cent to £763m in 2002. Unlike its terrestrial rivals, it maintained its share of total viewing, at 10 per cent.

But Mr Thompson said the station needed to be more creative in its programme making. "I think the purpose of Channel 4 is to do things first, to make trouble and to inspire change. If we do all of those [we will] be Britain's bravest and most original broadcaster."

The turnaround in profitability at the station is partly due to job cuts that will continue to the end of this year and will see staffing levels reduced by 25 per cent, from 1,200 to 900.

Mr Thompson took the "difficult decision" to restructure FilmFour Ltd, the station's film production unit, leading to the loss of 53 posts and incurring exceptional costs of £11.2m. He said the unit had been making films that Channel 4 would not want to buy.E4, the station's pay-TV entertainment channel, drew large numbers of viewers aged between 18 and 34 and was expected to break even by next year, he said.

The Channel 4 accounts revealed that the station paid more than £18m to companies linked to one of its board members, Peter Bazalgette, the chairman of Endemol UK, which makes Big Brother. Other Bazalgette-related programmes on the channel included Pet Rescue and Diet Tips for Girls. The report said Mr Bazalgette had no role in the commissioning.

The accounts also disclosed that David Brook, the director of strategy, left with a compensation package of £568,000. Mr Brook, who resigned last October, had been on a contract with a year's notice.