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Last Updated: Tuesday, 1 May 2007, 16:34 GMT 17:34 UK
Channel 4 sees profits slump 70%
C4's Richard and Judy
The Richard And Judy show will no longer run phone-in quizzes
Channel 4 has blamed a drop in advertising revenues and higher spending on digital TV for a 70% slump in profits to 14.5m during 2006.

C4 added that the figures showed it needed extra state funding, or it would have to screen more commercial shows at the expense of public service content.

The firm's profits could also be under pressure this year after controversy surrounded its Big Brother programme.

Its Richard and Judy show is also caught up in a phone-in quiz scandal.

The broadcaster is investigating the You Say, We Pay telephone quiz on the teatime programme, which allegedly urged viewers to call in even though potential winners had already been chosen.

C4 director of programmes Kevin Lygo said the show would not feature a phone quiz in any form again.

"No phone quizzes on Richard and Judy are envisaged," he said.

Tough choices

Channel 4's earnings report also revealed that the group increased its overall spending on programming to 608m. Spending on Big Brother during the 12 months rose to 125m from 99m in 2005.

However, the drop in profits forced bosses at the broadcaster to warn that without more government help the group would face some tough choices regarding its programme output.

"We may be faced with a stark choice," said chairman Luke Johnson.

"Either we will have to reduce our output of public service programming and focus more of our schedule on commercial programmes, or see Channel 4's finances continue to deteriorate," he warned.

Mr Lygo added that while US imports - such as the successful Desperate Housewives and ER - may be first to feel the pinch in any cutbacks, original programming could also be hit.

Show warning

Such a decision could also lead to an even bigger rise in quiz shows and game shows, like Noel Edmonds' Deal Or No Deal, which are widely seen as cheaper and easier to produce.

Such programmes accounted for 393 hours of programming last year, compared with 250 hours in 2005.

Meanwhile, spending on current affairs, religion and education programming dropped.

The report also gave details of chief executive Andy Duncan's pay package for the year.

Mr Duncan's basic salary, plus a performance-related bonus, was 622,000, according to the report.

The Channel 4 boss will also be in line for a 450,000 long service bonus later this year, of which he had accrued 375,000 by the end of 2006, the company said.

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