S4C provides three television services - analogue S4C, S4C digidol and S4C2
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The number of viewers watching Welsh language TV programmes on S4C fell by 90,000 during 2007, a drop of 15% in the channel's reach.
S4C's audience share also fell during 2007 from 3.6% to 3%, the S4C Authority annual report found.
Responding to the figures, S4C Authority chair John Walter Jones said that all TV channels were currently experiencing a drop in viewers.
S4C currently broadcasts over 80 hours of Welsh language programmes per week.
Figures contained in the report show that the number of people watching Welsh language programmes on S4C fell from 601,000 to 511,000 during 2007.
But Mr Jones said it had been a year of consolidation for the channel and insisted that S4C had not lost its audience, with the number of viewers remaining stable, and increasing numbers watching programmes on different platforms like broadband connections.
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Changes in audience share in 2007
BBC1 - down 3%
BBC2 - down 3%
ITV1 - down 2%
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The most watched programme on the channel in 2007 was an edition of Y Clwb Rugbi broadcast in May which televised the rugby match between the Dragons and the Ospreys. This reached 258,000 viewers.
In his foreword to the report, Mr Jones also emphasised that the broadcaster's sights were fixed on the challenge of digital switchover in Wales in 2009/10 and the launch later this month of its new extended service for nursery children, Cyw.
The report found the channel had hit or exceeded programming targets set by Ofcom.
The S4C Authority is an independent body responsible for the provision of Welsh language television programme services.
According to its website, S4C's programmes are broadcast across a range of platforms including television and broadband.
It provides three television services - analogue S4C, S4C digidol and S4C2.
Independent television companies are responsible for producing the majority of S4C's programmes. The BBC provides over 10 hours a week of programming. ITV Wales also makes programmes for the channel.
In 2009 the government will start to switch off the analogue signal in Wales.
At that time, S4C will become a wholly Welsh-language service.
English language Channel 4 programmes will no longer be broadcast on S4C as that channel will be freely available throughout Wales.
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