Channel 4 is making 15% of its workforce redundant and cutting costs by a total of £100m by the end of 2009 in response to a fall in advertising revenues. It is expected to see a 5% decline – or £50m loss – in advertising revenue this year.
The latest cost reduction programme was announced to staff today (September 23). It involves reducing the group’s £600m programme spend again, this time by more than £25m. It had already cut investment from £615m in 2007. The remaining £25m will be shaved from all other areas including marketing, new business investment, new media and general overheads.
Channel 4 is also planning a further £50m reduction in its cost base in 2009, in response to what it described as “some of the most challenging economic circumstances in its history”.
The broadcaster has also launched a programme of voluntary redundancy and says that redundancies will be made across all areas of the business, reducing the headcount by up to 150 posts to between 800 and 850. It has already cut about 200 roles and reduced staff to below 2001 levels.
Andy Duncan, Channel 4 chief executive, says: “Channel 4 has outperformed its competitors in recent years but the economic downturn is now affecting the entire media industry. Our objective as a public organisation is to operate at break even while maximising creative investment. With revenues falling, we’ve no alternative but to cut costs.”
The cost-cutting comes as Channel 4 discusses new forms of funding with the Government and Ofcom. The broadcaster faces an annual deficit of up to £100m by 2012.
The broadcaster adds that its economic model is being “continuously undermined by increased competition and a structural shift in advertising revenues from TV to online” despite it outperforming the commercial TV market in recent years.