Ofcom 'to help C4 with finances'

Channel 4's profits dropped by 70% in 2006

Media watchdog Ofcom says it will look into ways of helping Channel 4 make up a predicted shortfall in funding.

The broadcaster is worried that falling advertising revenue will affect its ability to make public service TV.

Ofcom ruled there was no "immediate pressure" on Channel 4's finances, but added it would start discussing how to help the network later this year.

But it told Channel 4 it had to deliver a more precise measure of the success of its public service programmes.

The broadcaster is expected to "demonstrate innovation, experiment and creativity" in return for getting free broadcasting space.

But Ofcom found that Channel 4 had cut its spending on news, current affairs and religious programmes in recent years.

There was also "less spend on original British production," it noted.

However, it added, the broadcaster was showing more current affairs programmes in peak viewing hours.

Loss-making

Big Brother is one of Channel 4's main sources of revenue

Channel 4 saw its profits fall by 70% to £14.5m during 2006.

It blamed a drop in advertising revenues and higher spending on digital TV for the slump.

A report commissioned by Ofcom concluded that Channel 4 would be loss-making by 2010.

"We are concerned that Channel 4 may not be able to fulfil its public service purpose in the future," said Ofcom's chief executive, Ed Richards.

"The next phase of our work will be to ask what Channel 4's purpose should be in the longer term, and what the best way is to achieve it."

Options for helping improve the financial situation include short-term funding from the government, getting the BBC to pay for the switch to digital, and providing free space on digital transmitters.

Channel 4's chief executive Andy Duncan welcomed the report.

"Today's statement ends the debate about whether or not Channel 4 is going to face future funding problems and we can now begin focusing on how to address them," he said.

"We welcome Ofcom's suggestion that the government consider our request for short-term support to help underpin our public service contribution while medium to long-term measures can be assessed."