BSkyB launches attack on Channel 4

Rupert Murdoch’s BSkyB has launched an attack on Channel 4, saying it has wasted £270 million on poor investments.

In response to Lord Carter’s Digital Britain report, which will shape the future of British broadcasting, BSkyB wrote a letter claiming that Channel 4 has wasted millions of pounds on failed business ventures and would still be profitable if it was better run.

Sky claims that C4 has wasted £270 million on “unprofitable non-core commercial activities”, such as its investment in digital radio, and said the government should step in to prevent it making the same mistakes in the future.

Channel 4 claims it is facing a shortfall of around £150 million due to the deteriorating advertising market and global downturn.

A number of proposals have been thought up in response to Channel 4’s funding problem, which mainly involve combining it with another business in order to safeguard its future.

Since Lord Carter’s review, Five has expressed interest in merging with Channel 4; ITV has explored the possibility of a three-way merger between the three leading commercial broadcasters; and BBC Worldwide has hinted at a joint digital venture with C4 – 4 Worldwide (see BBC Worldwide and C4 join forces).

However, in its submission to Lord Carter, Sky argues that Channel 4 is in a stronger financial position than many of its commercial rivals, with cash reserves of around £425 million.

“Channel 4 has a strong balance sheet and has accumulated sufficient financial reserves to see it through the current recession,” Sky stated.

The satellite broadcaster said Channel 4 could retain its independence by withdrawing from unprofitable businesses and developing new sources of revenues.

Sky also claims that it has offered to work with the struggling broadcaster, to create a group of paid-for channels that would be carried on the Sky platform and promoted by Sky.

However, Channel 4 is thought to of rejected the idea of a joint venture with Sky.

Sky’s response suggests that is against the government’s plans to create a separate public service broadcasting entity with Channel 4 at its heart, in order to rival the BBC.

The broadcaster’s chief executive Jeremy Darroch is expected to call on the government to abandon the plans shortly.