Channel 4 in cash crisis

Channel 4, the UK’s second public broadcaster, could find itself facing a cash shortage that will potentially build by 2012 to as much as $175m (£100m), says head of UK regulator Ofcom (pictured, left).

TV regulator Ofcom issued the warning, with CEO Ed Richards saying in a speech delivered to the Royal Television Society in London that Channel 4’s financial prospects were precarious given the downturn in the UK advertising market.

"To break even, Channel 4 would need to cut its investment in public service content year on year to 2012," Richards said. "We have subjected these projections to close scrutiny and, while we are not as pessimistic as Channel 4 itself, we do believe this annual deficit could amount to between £60 million ($107 million) and £100 million ($179 million) by 2012, excluding the costs of the Next on 4 vision." The Next on 4 plan includes creating more content for younger viewers, online activity and transmitting in HDTV.

Channel 4 boss Andy Duncan reponded by saying Channel 4 was “very encouraged that Ofcom now broadly accepts our forecasts on the size and urgency of our funding gap and agrees that identifying a new funding mechanism for Channel 4 is a ‘pressing priority’. We also warmly welcome Ofcom’s endorsement of our Next on 4 creative vision and its recognition that Channel 4 is critical to ensuring ongoing competition to the BBC in the provision of high-quality public service programs.”