Alex Mahon’s assessment of the crisis facing the television market is frank: the Channel 4 boss believes many of the production companies that underpin Britain’s global reputation for making hit shows face being forced out of business.

Amid the worst ad slump in more than 15 years, which the chief executive has described as “market shock” territory, her comments are unlikely to warm the already strained relations between the broadcaster and the 300 independent TV producers that depend on it.

“I suspect we are going to go through a market correction where we’ve got too many producers to be sustained now that there have been reductions in the market. And you’ll see more [cuts] this year and that’s really difficult,” says Mahon, as we speak in her office at Channel 4’s London headquarters – due to be sold off as part of the most radical restructuring in its 42-year history, which will also see it shed more than 200 staff.

The broadcaster has already taken the axe to its programming budget by pausing, cancelling and phasing the release and commissioning of shows to stretch budgets, leaving many content suppliers in financial limbo.

The casualties have already begun. Earlier this month it was announced that RDF – one of the most famous names in British production with a back catalogue that includes past Channel 4 favourites such as Wife Swap, Faking It and The Crystal Maze – is to close after three decades.

However, as indies reel in the downturn, it is easy to forget that Channel 4 remains their biggest champion. Set up in 1982, its unique status – state-owned, commercially funded, with no remit to make a profit and barred from making or owning its own programming – has enabled the UK independent production sector to flourish like no other broadcaster, particularly outside London.

The post-pandemic bounce back provided record years for Channel 4 in 2021 and again in 2022, when its programming budget hit an all-time high of £713m, capping an unprecedented three years of surpluses that were funnelled back into content.

And yet, while much of its current woes can be pinned on the ad crunch and rise of digital rivals, some are asking whether Channel 4 has lost its mojo to come up with new hits.

Its bedrock audience and commercial winners remain shows such as The Great British Bake Off, Gogglebox and Taskmaster, which were either poached from other broadcasters or commissioned under previous management. Meanwhile, rivals such as the BBC and ITV have enjoyed recent bumper ratings with commissions such as the Traitors and Mr Bates vs The Post Office.

This week the presenter Richard Osman, a former executive at production company Endemol Shine, criticised Channel 4 for its lack of big new shows in his podcast arguing television “is a hits business and nothing else”.

Mahon disputes the suggestion that Channel 4 is in a hits drought, pointing to the critical success of shows such as breakout The Piano, comedy Big Boys, current affairs investigation Russell Brand: In Plain Sight and factual drama Partygate.

She argues that part of the issue is that with so many hundreds of shows available on streaming and traditional TV viewers have “choice paralysis”, reverting to classics, with the biggest shows on Netflix, Disney+ and Max being oldies such as Friends, Suits, Grey’s Anatomy and Big Bang Theory.

“Look at what has been on in January – Gladiators, a show from 1992, Big Brother, a show from 2000 – we shouldn’t be doing those shows,” Mahon says. “Everybody is relying on brands they know for those reasons, but that is not what Channel 4 should be doing. Around 60% of our titles each year will be new, underscoring our commitment to innovation. It is easy and obvious to do a retread.”

Last month, Mahon unveiled the biggest round of job cuts at Channel 4 since 2003, after the business ballooned from a little over 800 staff to more than 1,300 since she joined at the end of 2017. The aim is to shift away from a dependence on traditional TV linear advertising, which provides two-thirds of its £1bn-plus revenues, and embrace the digital future.

Similarly radical shake-ups are happening across the industry – in some cases fuelled by a costly over-zealous drive into streaming – with the giants Disney, Warner Bros Discovery and Channel 5-owner Paramount announcing combined cuts of more than $10bn, while Sky UK recently announced 1,000 redundancies.

“The whole challenge is how you reinvent yourself as a broadcaster and become digital,” Mahon says. “That is what we have to do now, that is what everyone else is doing.

“We get a lot of attention but it is happening everywhere. It is exactly the same as has happened to retail and has happened to print, and I don’t think it is easy. Compare us to others and I think we are well ahead.”

By the end of this year streaming will account for 30% of Channel 4’s total revenues, well ahead of UK rivals, and by 2030 the target is to pass 50%. Mahon also fought off a concerted attempt by the government to privatise the business, which was formally dropped a year ago.

The broadcaster’s model will be overhauled further later this year when the media bill is passed allowing it to make and license its own shows to other broadcasters for the first time.

“Having the ability to make our own programming is a huge change,” says Mahon, who insisted the move to divert part of its content budget to its own operation would not harm the independent production sector. “Channel 4 hasn’t had many ways to diversify before, now we have that option.”

She also defends the decision to sell off its £100m headquarters in London. “It is not normal for companies to stay in the same building forever,” she says, joking that she has no intention of moving staff out of central London. “I don’t think we are interested in going to Chiswick.” However, plans are still in place to increase the number of roles outside the capital to 600. Channel 4 has a “national headquarters” in Leeds and operations in Bristol, Glasgow and Manchester.

While Mahon believes the TV ad market is showing “more of a pulse” this year, she suggests Channel 4 is likely to look to formally increase the £75m emergency credit facility it has in place. Under government statutes enacted in the early noughties the broadcaster could look to have a facility of up to £200m, although it also has more than £250m in cash reserves.

“The discussion is: ‘Do we take a bigger facility of up to £150m?’ We will probably take that up over time,” says Mahon, who has already said that Channel 4 expects to report losses this year and next. “We haven’t drawn any of it, we may or may not throughout the year, it depends on how the market goes. Any normal business has debt in place.”

By the end of this year Mahon, 50, will have served seven years as chief executive, the average life expectancy of a Channel 4 boss. Speculation remains rife about her next move.

Born in London, to an American father and English mother, Mahon moved to Edinburgh aged five. She studied physics at Imperial College, subsequently gaining a PhD, but entered the world of media with a job at German-based pan-European broadcaster RTL.

Mahon later joined subsidiary Fremantle, producer of the X Factor, and then Talkback Thames.

She spent nine years at Shine, the MasterChef maker set up by Elisabeth Murdoch and subsequently sold to her father before being merged with Endemol, rising to chief executive before leaving in 2015.

After two years running Foundry, the special effects firm behind films such as Avatar, she joined Channel 4 as its first female chief executive.

The media rumour mill has pointed to a potential job in the US, where she has worked before, with Mahon due to attend the Oscars next month where the broadcaster’s film production company Film4 boasts 16 nominations including best picture for Poor Things and Zone of Interest.

“I have plenty of work left to do, Channel 4 is a delight,” she says. “I won’t be here forever and neither should I be. Have I got plenty of work left in me? Yes. I have worked in the US before [but] I do not have a secret job lined up.”