Channel 4 drops into the red

$30 mil loss first in a decade

By ERICH BOEHM

Thompson

LONDON -- The U.K.'s Channel 4 has posted a loss of £20.6 million ($30 million) for 2001, the terrestrial's first loss in 10 years, and compared to a profit of $31.3 million in 2000.

C4 blamed the downturn on the general decline in the advertising market, and said sales from ads and sponsorship were down 5% to $902 million. The channel noted that its commercial terrestrial rivals, ITV and Channel 5, were off 13% and 9% respectively in the year.

Even so, C4, which is technically a pubcaster, was caught out by its ambitious expansion plans at commercial arm 4 Ventures.

The channel's sales were up 2% to $1.06 billion on the back of a 54% increase in sales at 4 Ventures to $224 million. Nevertheless, 4 Ventures in 2001 showed a loss of $95 million, more than double that of the previous year.

The business includes niche entertainment channel E4, which many observers consider to be underperforming, and premium channel FilmFour, now with something approaching 450,000 subscribers. E4, launched in 2001, saw a loss of $54.3 million, Film Four a loss of $16.2 million.

Meanwhile, FilmFour Ltd., C4's film company, posted a loss of $7.9 million, compared to a loss of $4.4 million in 2000. The unit's biggest disappointment was last year's "Lucky Break."

Mark Thompson, C4's new chief exec and former BBC director of television, said: "Channel 4 performed better than its main rivals in 2001 in the most difficult market conditions for a decade, but we could not escape the effects of reduced spending on TV advertising, which pushed us into the red."

C4 said it was encouraged by growth in the second quarter of this year, with a 4% upturn in ad sales in April, and a predicted similar boost for May and June.