Channel 4 will report a deficit for 2012, its chief executive David Abraham has warned.
The broadcaster will increase its spending on UK programmes from around £360m in 2011 to nearly £450m, partly funded from a £50m surplus generated in 2010 and by reallocating money which would have been spent on acquisitions from overseas.
Instead, the remainder of the funding injection will come from Channel 4 reserves, leaving the broadcaster in deficit.
Mr Abraham told a media conference in Oxford on Wednesday that Channel 4, which is commercially financed but state-owned, will flourish by investing more in content as opposed to cutting back as many of its rivals are considering doing.
“By using surpluses built up over the last few years, we are able to smooth our investment into 2012 and beyond. We want to grow Channel 4 and we want to grow the UK creative economy. To do that we need to invest and, as every entrepreneur knows, ‘you need to put down in order to pick up’,” he said.
The broadcaster, whose shows run the gamut from Hugh's Fish Fight to My Big Fat Gypsy Wedding, said its advertising sales were strong in October but it lost audience share last year a crucial measure for advertisers.
It has also seen a decline in valuable audiences aged 16-34, after it dropped Big Brother.
The injection of funds will help restore Channel 4’s programme budget to the kinds of levels seen in the past, and provide a much-needed fillip to the independent television production sector, which is seeing budgets and margins severely eroded.
Whereas the BBC and ITV (Other OTC: ITVPF.PK - news) spend a large part of their programming budgets on content made in-house, Channel 4 commissions or buys in all of its content.
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