Channel 4 is set to report a loss during 2012 as the broadcaster looks to invest in creative talent at the expense of profits.
CEO David Abraham said the broadcaster is “planning for a reported deficit in the 12 months of 2012”, its first full-year loss for more than a decade, as it steps up investment to “grow the UK creative economy”.
He told the Oxford Media Convention: “This is a temporary deficit, funded from transitional reserves and invested in the future. By using surpluses built up over the last few years, we are able to smooth our investment into 2012 and beyond.”
The broadcaster will increase its spending on UK programmes from around £360m in 2010 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.
Abraham said Channel 4 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 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 spend a large part of their programming budgets on content made in-house, Channel 4 commissions or buys in all of its content.