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Channel 4’s new media losses grew from £6 million to £15.4 million in 2007, as the broadcaster swung to its first ever deficit, leaving it more eager than ever for public service funding reform. New media revenues were up from £18.5 million to £26.7 million, today’s annual report says, but the loss “arises as a result of early trading losses for this new business and related platform investment”. C4 unified new media staff in their first ever dedicated directorate in November, under former Yahoo (NSDQ: YHOO) exec Jon Gisby, and started 4oD in earnest.
In the year, C4 sold its 4Learning education initiative in exchange for a £2.1 million investment in Espresso Broadband. C4 reported 4oD offered more than 70 hours catch-up programming per week. It’s written down costs for the 4oD download app in expectation of receiving payments from the upcoming Kangaroo JV.
But the overall view is alarming. Though TV ad revenue was up 6.2 percent to £825.2 million, the group swung from a £14 million profit to £8.8 million loss. C4’s audience is down 11 percent in the multi-channel world. Hence the necessity for 4oD to increase ad impressions. C4 had repeatedly warned of a £100 million shortfall thanks to digital investments. Chair Luke Johnson (via Guardian): “The tipping point we have been warning about has been reached, with the core channel now in deficit and being supported by profits from secondary activities.” It hastens Ofcom’s ongoing review in to public service broadcasting, which could decide either to privatise C4 or to hand it a slice of the BBC’s license fee. The future of UK broadcasting is up for grabs – and C4 plays a central role.