Channel 4 has abandoned its planned entry into the UK commercial radio market following a rapid fall in TV advertising revenue. The broadcaster will now focus on working through its £100m cost-cutting programme.
The group has today (October 10) informed staff working in its radio division that it would not be proceeding with the planned launch of three national digital radio stations on the DAB platform. Its first station, E4 Radio, was scheduled to go on air in spring next year.
The closure of the division will involve up to 15 job losses, although staff will be consulted about possible redeployment within the Channel 4 group.
The broadcaster will also inform its fellow shareholders in 4 Digital Group of its intention to withdraw from the consortium, which was awarded the licence to run the second national commercial DAB multiplex in July 2007.
Channel 4 is due to consult with its partners about the implications for the multiplex licence granted by Ofcom.
Withdrawing from radio will save Channel 4 up to £10m next year and contribute towards the £100m savings it is targeting in response to a 5% downturn in TV advertising revenues.
Channel 4 is proposing to reduce headcount by around 150 posts, or 15%, and cut its programme spend by more than £50m across 2008 and 2009.
Chief executive Andy Duncan says: “We’ve taken this decision very reluctantly. We’ve pursued our radio plans in good faith and continue to believe DAB has a strong future and that we could make a return from radio in the medium term.
“Frustratingly, our plans have been overtaken by a drastic recent downturn in our revenues and we will have to forgo this future profit stream. We can no longer afford the short-term investment necessary given that we are having to cut so deeply across all parts of the organisation.”
Channel 4’s only remaining major new business investment is video-on-demand service, 4oD, which is due to combine into a UK VOD joint venture with BBC Worldwide and ITV.