Channel 4’s 25th anniversary year was more than just a significant milestone. It marked a watershed. We celebrated with some outstanding programmes; we continued our journey to becoming a multi-media company with continued digital channel growth, a strikingly successful first year for video-on-demand service 4oD, the award of the second national commercial digital radio multiplex licence, and our biggest ever acquisition through our music joint venture with Emap. Most important, we started a process of creative renewal that will shape Channel 4’s output and aspirations for years to come.

During the year, Channel 4 showed engaging and thought-provoking programmes that were recognised with a host of awards, including our fifth Oscar in four years, for Peter and the Wolf. In factual, no documentary matched the emotional power of China’s Stolen Children and Once Upon a Time in Iran, or shone such discomforting light on society as Meet the Natives, My New Home and The Seven Sins of England. No multi-media campaign moved so many to action as our Lost for Words literacy season. Drama tackled difficult subjects with intelligence and sensitivity in The Mark of Cain, Britz, Boy A and Secret Life. And Skins, the witty E4 teen drama, drew in the hard-to-catch YouTube generation.

2007 was of course a notable year in a less welcome respect. A number of important measures were put in place following the Celebrity Big Brother race incident and the fakery and premium-rate telephony controversies that affected the wider industry: we appointed Channel 4's first Viewers’ Editor, established an online discussion forum for viewers, returned a regular right-to-reply programme to the schedule, and announced our complete withdrawal from the use of premium-rate telephony for profit. In other programme challenges Channel 4 was on firmer ground: complaints about the documentary Diana: the Witnesses in the Tunnel, and about Dispatches: Undercover Mosque, were rejected by the regulator, and both programmes fully vindicated.

The conditions in which we delivered our on-screen success remained challenging. After a run of growth in audience share that has more than held up against the competition in recent years, we did experience a drop in all-time share on the core channel, although within this the peak-time schedule performed better. Across the digital channel portfolio we enjoyed an all-time high in peak time and our second strongest portfolio performance ever. Nevertheless, the revenue trend is clear and our surplus was only just above break-even. The financial pressures that we will face in the transition to digital were confirmed by the independent financial review commissioned by Ofcom from strategy consultants LEK. The need to agree an updated form of public support to replace the historic subsidy of analogue spectrum is growing in urgency.

Against that backdrop, we made substantial progress in developing our thinking about our future role and purpose, with extensive consultation during the year with viewers and stakeholders. We set out this thinking in Next on 4, our strategic blueprint published in March 2008. We identified a set of four core purposes designed to allow Channel 4 to play an even more exciting role in a digital world. These purposes are focused on nurturing new talent, championing alternative voices, challenging people to see the world differently and inspiring change in people’s lives. We will continue to offer something for everyone some of the time, but will place particular emphasis on serving younger and minority audiences. We will focus on delivering publicly valuable content across a range of digital platforms, and building on our strengths in bringing creative innovation from the margins into the mainstream. In everything we do, our aim will be to take creative risks and offer our audiences the best programmes and content, whatever the platform.

In what was in many respects a challenging year, we also had many successes and made considerable progress in moving Channel 4 forwards. I’d like to thank all our staff and external partners, especially in the independent production sector, for their continuing contribution.

In the following pages we highlight some of the programmes from 2007 that demonstrate the qualities that make Channel 4 so distinctive – and so valuable a part of Britain’s cultural and democratic life.