Channel 4 in financial mess

What do you do with an ailing public broadcaster that keeps telling anyone who’ll listen that it is broke and rapidly running out of cash? To date the UK’s Channel 4 it has been rumoured to be somehow or other merging with the BBC’s commercial arm, BBC Worldwide, or a shotgun marriage with wholly commercial Channel 5 (owned by German broadcasting giant RTL), or bailed out by a “top slice” of BBC licence-fee funding. It is a right royal mess.

Launched in 1982, Channel 4 was formed to satisfy certain well-defined niches in UK broadcasting, not least to demonstrate “innovation, experimentation and creativity”. The network is ultimately publicly owned, although depends entirely on TV advertising and sponsorship for its revenues. All went swimmingly well while the UK advertising market was buoyant. The past year or so, and since 2007, has seen that income stream under pressure, and Channel 4’s share of the TV ad-market has declined, along with its ratings.

While Channel 4’s remit to be a public broadcaster celebrating the UK’s diversity was once a mainstay of its schedules, more recently it has become notorious for bargain basement programming like Big Brother and Celebrity Big Brother, which dominate the schedules. Channel 4 has tended to shunt its “public remit” obligations to new digital channels E4, More 4, 4Music and its film channels.

It once invested heavily in movies with considerable success. But it has also lost cash, on subscription TV, on radio investments (Oneword, and digital radio), on horse racing (At The Races).

Currently, Channel 4 says it has an annual funding shortfall which will grow to £150m by 2012 which is hardly good news given the economic climate. C4’s CEO Andy Duncan fully admits that merging with RTL would be like mixing “oil and water” and end up a mess, diluting Channel 4’s alleged distinctive position in British broadcasting.

Later this week there are like to be further comments from the BBC, regulator Ofcom and the government.