Channel 4 boss warns of cuts

Mr Thompson, the former head of BBC Television, told staff he wanted to create a leaner company, employing fewer people, with eight commissioning departments instead of 13.

He said a smaller staff was vital if the channel was to recreate its bold, risk-taking spirit.

Changes in media ownership rules mean there could soon be a single ITV company, which could be American-owned, while BSkyB could own Channel 5.

He said the channel had to "box clever" to compete with larger rivals.

"We've got a real fight on our hands," he told staff.

"If we don't change the schedules, the way we work, the structure and scale of the organisation very radically indeed, we are not going to succeed.

"It's going to be an exciting and positive time to be at the channel, but it's also going to be a bumpy time. Creating a leaner, less hierarchical Channel 4 will mean employing fewer people."

Thompson did not reveal how many of Channel 4's 1,100 employees could lose their jobs.

Closure reports

A number of newspaper reports suggested on Monday that FilmFour Ltd, a subsidiary of Channel 4, could close completely.

But the publicly-owned channel is insisting the worst-case scenario would only see it scaled down.

FilmFour Ltd is a part of 4 Ventures, Channel 4's commercial department, which also includes the broadcaster's pay-TV channels and internet interests.

It is a separate operation to the FilmFour subscription TV channel, which broadcasts movies on cable and satellite TV.

A number of recent flops contributed to Channel 4's £20m loss and could start a move back to making cheaper films primarily for television.

But FilmFour has had some successes, and has been credited with giving the UK film industry a shot in the arm.

Failures

FilmFour has produced hits including Four Weddings and a Funeral, Trainspotting and The Crying Game which took millions at the box office.

But a move to produce fewer films but with bigger budgets has not been a success.

Box office failures have included prison comedy Lucky Break and the Steve Coogan-vehicle The Parole Officer.

Current release Birthday Girl, starring Nicole Kidman, has had mixed reviews, but looks set to be another flop, taking only £240,000 over its first weekend.

It has not had a major box office hit since 1999's East is East, an affectionate comedy about an Asian family in 1970s Salford, which took £7.2m in the UK.