Cash-strapped Channel 4 pays boss £1.21m

Channel 4 chief executive Andy Duncan almost doubled his salary to £1.21m in 2007, despite a run of lurid headlines that began with the Big Brother racism row and ended with a fine over premium phone line scandals on Richard and Judy's You Say, We Pay.

The hike in pay, largely a result of a £450,000 loyalty bonus, came as the broadcaster claimed financial pressures were beginning to bite, with yesterday's annual report showing the core channel had made an operating loss for the first time since 1992.

Growth in advertising revenues and improved financial performance by its digital channels, including E4 and More4, helped it to record an overall profit after tax of £500,000, down from £14.5m last year.

Duncan said the broadcaster was "running out of road" as advertising revenues this year declined and it would soon need public money to plug the gap if the amount it spent on programming wasn't to go "seriously into reverse". He said new funding measures needed to be in place by 2010. Overall turnover was flat, but chairman Luke Johnson warned that it would never again be able to afford the record £624m it invested in programming and content across its channels in 2007.

But while Channel 4 spent more on content overall than ever before, the figures show its spend on original programming on the main channel went down slightly and the amount it spent on acquired programming, such as Desperate Housewives, went up by £21m. "In response to market conditions, we are already having to cut editorial budgets and a new public funding solution is now urgently required if we are to maintain such levels of public service plurality to the BBC," said Johnson.

Ratings for the main Channel 4 service fell 11% to 8.7% during the year, although this was offset by growth for its digital TV channels. Its overall share of viewing across all its channels dipped just slightly to 11.9% from 12.1% the previous year.

Johnson defended Duncan's pay packet, saying consistency of leadership was vital to secure Channel 4's future, and the decision to arrange a new two-year loyalty scheme that will pay out £450,000 in 2009.