BskyB has bluntly blamed C4 for bieng the architect of its own demise. In an unforgiving response to comms minister Lord Carter's interim Digital Report, it claims Channel 4 has wasted millions of pounds on failed business ventures and could be profitable if it was better run.
BskyB says C4 wasted £270m (E309m) on “unprofitable non-core commercial activities”, including an ill-fated investment in digital radio, and argues that the government should step in to prevent it from making further “poor” investments.
Channel 4 claims it is facing a shortfall of up to £150m because of falling advertising revenue and wants the government to intervene to shore up its finances. The government appears to have accepted that C4, which is state owned but funded by advertising, will have to be combined with another business to safeguard its future. That is most likely to be achieved by engineering a merger with BBC Worldwide, the corporation’s commercial arm, or with a commercial rival such as Five or even ITV.
Sky argues that C4 is in a stronger financial position than many of its commercial rivals, with cash reserves of £425m, and claims it could retain its independence by withdrawing from unprofitable businesses and developing new sources of revenues. Sky also says it is prepared to work with Channel 4 to create a portfolio of paid-for channels that would be carried on the Sky platform, and heavily promoted by the satellite broadcaster.
The intervention clearly implies Sky is not happy about government plans to create a second public service broadcaster, with Channel 4 at its heart, to compete with the BBC.