Channel 4 is considering taking an emergency loan to shore up its finances amid the deepest slump in advertising since the financial crisis.
Alex Mahon, Channel 4’s chief executive, said the broadcaster was prepared to use its emergency £75m debt facility after an advertising “market shock”. The public-owned company has a revolving credit facility it can draw upon as a financial backstop if necessary.
Speaking in front of MPs on the Culture, Media and Sport Committee, Ms Mahon said: “We are in what I would probably call market shock territory.
“This level of advertising fall has only been deeper in the 2008 recession, so I imagine in the next year we’ll look at how we use that debt facility.”
It would mark the first time Channel 4 has relied on its £75m financial backstop. The public service broadcaster drew down on the debt as a precaution at the height of the pandemic in 2020 but never used the money.
Channel 4 has been grappling with a sharp downturn in advertising that has forced it to slow down commissioning and axe programmes in recent months.
Ms Mahon said 2023 had been even tougher than expected as a hoped-for recovery in the second half of the year has failed to materialise.
She warned that growth in digital advertising revenue on its All4 streaming platform was being offset by a decline in traditional TV ads.
As a result, Ms Mahon said revenues would be down 8-9pc this year – deeper than the 6pc previously forecast. The broadcaster, which is publicly-owned but commercially funded, will also post a deficit.
Channel 4’s revenues fell 2pc last year to £1.1bn, with two-thirds coming from traditional advertising.
The decline in traditional TV viewing has forced the broadcaster to focus on its digital output.
Total streaming views were down 10pc to 1.4bn last year. However, this was skewed by a surge in viewing during lockdowns and Ms Mahon said streaming was up around 21pc so far this year.
Bosses are also looking at ways to diversify the broadcaster’s business model beyond advertising.
Under the terms of the Media Bill, which was introduced earlier this month, Channel 4 will no longer be banned from making its own programmes.
The change means Channel 4 can now develop its own programmes that it can sell internationally in an effort to secure its future sustainability.
Sir Ian Cheshire, chairman of Channel 4 said the Bake Off broadcaster would consider setting up in-house production facilities but warned it was not a “silver bullet”.
The proposals have sparked anger among independent producers, which rely heavily on Channel 4 for commissions and have already been hit by the slowdown.