Channel 4 has defied calls to slash its estimated £50m marketing budget in response to fears over future funding.
Chief executive Andy Duncan says the budget has already been cut by ‘a couple of million pounds’ for 2007, but to cut it any further would be ‘commercially damaging’.
His firm stance follows an Ofcom-commissioned audit of the broadcaster’s finances published last week, which predicts it will be operating at a loss by the end of the decade and could run out of money altogether by 2012.
Five director of content Lisa Opie advocated Channel 4 cut its marketing budget before asking for more help earlier this year. Marketing spend was also mooted as an area for savings by consultancy LEK, which authored the Ofcom report.
However, Duncan has discounted rivals’ ‘vested’ opinions and says marketing spend will not be cut.
“To cut the marketing budget would be self-defeating,” says Duncan. “I don’t think there is any room for manoeuvre. To further cut the marketing spend would be commercially damaging to us, in terms of ratings and reputation.
“With so many channels investing in brand, products and services to the consumer, [marketing] is more important now than ever.”
Duncan, a former Unilever marketer and BBC marketing director, almost doubled Channel 4’s marketing budget when he joined the broadcaster almost three years ago.
He further suggests that the broadcaster must keep investing in new and different media such as the internet and digital radio.
Duncan says: “We could scrap new digital and media platforms [to save money], but that would be very short sighted indeed. And the LEK is not recommending it.”
In its ‘central case’ scenario, LEK says C4 is likely to stop making money in 2010, even after taking into account cost savings and the contribution of existing commercial ventures. By 2012, when the analogue television signal is turned off, it estimates Channel 4 would be making an annual loss of £32m.