Channel 4’s 2014 Annual Report, published today, reveals the broadcaster has met its planned three-year investment and break even business targets, reporting an overall financial surplus of £4m, with cash reserves remaining above £220m for the fifth year in a row.
However, Channel 4 revenues rose by £30m, just 3 per cent, to £938m in 2014, significantly below the wider ad market growth of 5 per cent to 6 per cent.
At a press conference today, Channel 4's chief executive David Abraham attributed the below par performance to the impact of the ITV dominated Fifa World Cup 2014. In total, revenue generated by Channel 4 sales house, which includes third party sales for a number of broadcasters including UKTV and BT Sport, exceeded £1bn for the fourth successive year.
For Abaham the return to profitability for Channel 4's operation was not something he wanted to celebrate as an achievement in itself. Expressing views consistent with his core message over the past three years, Abraham said he could have "hoarded" back money and avoided the years of deficit but said, "I don't think it would have helped us get to where we are today creatively".
In 2014, Channel 4 reinvested 64 per cent of total income back into programming - significantly more percentage wise than its purely commercial rival ITV.
Abraham added: "In 2014 our three-year Investing in Innovation strategy bore fruit, with creative renewal now flourishing across multiple genres and the significant number of major creative awards won testament to the quality and impact of our programmes and film.
"Strong growth in revenues has enabled us to break-even target and we have been able to launch a number of innovations to support the future sustainability of Channel 4’s not-for-profit model.
"Both culturally and financially Channel 4 continues to punch above its weight and make a huge contribution to the creative sector at no cost to the UK taxpayer."
The three-year strategy saw Channel 4 draw down on its reserves to fund a creative overhaul of the schedule – as well as strategic business innovations.
UK original content spend of around £430m was maintained over three years (2012-2014). Returning series include Gogglebox, Educating… ,The Island, The Jump and The Undateables.
Jay Hunt, chief creative officer, said Channel 4 is enjoying "creative renewal", having "weaned ourselves off Big Brother".
She noted the range and scale of awards success in 2014, which include Channel of the Year, three Oscars, and more Bafta and Royal Television Society programme awards than any other UK channel.
The broadcaster highlighted how viewing share in peak-time and for 16-34s had increased across the Channel 4 portfolio in 2014. Channel 4's viewing share for 16-34s was 17 per cent in 2014, an increase of 0.3 percentage points.
However, overall audience figures for Channel 4's main channel dropped by 2.5 percentage points in 2014. The digital channel More4 dropped by a similar amount while Film4's audience was down by 1.4 percentage points and both E4 and 4Music fell 0.2 percentage points.
It resulted in Channel 4's total TV portfolio, including E4, More4 and Film4, falling by 1.6 percentage points to 10. 9 per cent.
The broadcaster pointed out that between 7pm and 11pm the main channel has remained flat.
Between 8pm and 9pm, share has risen to 6.6 per cent, with 8.3 per cent between 9pm and 10pm, thanks to shows including Bear Grylls’ The Island, Benefits Street and The Undateables.
Channel 4 chairman, Lord Burns said: "We believe 2014 represents one of Channel 4's strongest performances...
"As a not-for-profit organisation, Channel 4 plays a unique role as both a creative greenhouse for the UK and a major contributor to the creative economy.
"I’m very pleased that the award winning creative output and commercial innovation we have outlined in the annual report demonstrate that Channel 4 is strongly delivering to its public service remit and is well positioned financially for a sustainable future."