Channel 4 offsets losses with online revenue, bringing Glee to directors

Published on Wednesday 23 June 2010 19:29

RECORD profits from digital media helped broadcaster Channel 4 to break even last year despite the severe downturn in the advertising market.

The company said it had seen an "unprecedented fall" in TV advertising revenues, which dropped by more than 10 per cent year on year to 706.7 million, against a decline for TV advertising across the industry as a whole of nearly 12 per cent.

But a 53.4m profit from digital TV channels – including E4, the home of US hit musical comedy Glee – as well as 3m from its online and on-demand sections, helped to offset a 61.6m loss on the broadcaster's core channel.

Overall the company managed to achieve a surplus of 300,000, compared with 1.8m in 2008.

Chief executive David Abraham said: "We have created a stable financial base that allows us to commit with confidence to a fresh round of creative and commercial innovation, renewing Channel 4's schedules post-Big Brother and positioning ourselves to take advantage of the opportunities that arise from the ongoing convergence of television and other media."

The broadcaster's total TV viewing share fell 3 per cent to 11.5 per cent and overall turnover fell by 8 per cent to 830.3m, compared with 906.1m in 2008.

The company slashed its continuing operations costs by 68.2m to 778.7m. Spending on programmes was cut by more than 50m, from 598.6m in 2008 to 548.3m last year.

Its digital TV channels – E4, Film4, More4 and 4Music – also saw double-digit growth in market share to 4.1 per cent of total UK viewing figures.

The channels bucked the market trend with 6.3m in extra revenues, bringing them up to 181.3m for the year.

Its digital stations also delivered a 43 per cent increase in pre-tax profits to 53.4m.

The broadcaster said a decline in display advertising online was offset by improved revenues from 4oD, its video-on-demand service, which enjoyed a 60 per cent year-on-year increase in full-length programme views to 218 million, helping a 31 per cent year-on-year increase in visits to channel4.com and e4.com to 230 million.

Profits from digital largely offset the loss of 61.6m on the core channel, which was hit by a 14 per cent or 93.6m revenue decline to 575.1m.

A redundancy programme also contributed to an 8.7m reduction in employment costs in 2009. Channel 4 paid 3.85m including salaries, bonuses and benefits to 14 executive and non-executive board members last year, compared with almost 3.42m in 2008.

Former chief executive Andy Duncan's total remuneration for the year was 1.48m, including 514,000 in salary and fees and 731,000 in lieu of notice. Chairman Lord Burns said the payment "reflected" contractual agreements with Duncan.