Five, the broadcaster behind Neighbours and CSI, is planning to make dramatic cuts to its overheads that could lead to as much as a third being slashed from its wage bill.

Facing a severe downturn in advertising, the channel wants to protect its peak-time schedule, forcing it to make draconian savings through job cuts that may involve about 90 redundancies from a workforce of about 270.

Dawn Airey, the new executive chairman, has engaged Eden McCallum, a consultancy, to try to save money in a year when revenues are predicted to fall by up to 20 per cent. In that case, turnover of about £340 million in 2008 would tumble by nearly £70 million, reflecting a 10 per cent fall in the television advertising market coupled with the effects of a 1 per cent loss of audience to ITV, Channel 4 and BSkyB.

Adding to the pressure on Five is a blow to its hopes of a merger — proposed by RTL, its owner — with the state-owned Channel 4. Andy Burnham, the Culture Secretary, said last week that he preferred that Channel 4 join forces with BBC Worldwide, the BBC’s commercial division.

Five’s wage bill was about £25 million in 2007, according to the last set of figures available at Companies House. A one-third cut would save £8 million, not enough to offset the feared loss in advertising revenue. As a result, Five is reviewing its daytime schedule and is expected to make savings to its £210 million on-screen budget.

Last month the broadcaster decided to drop its Trisha Goddard talk show after more than four years on air. Ms Airey said that the channel could no longer justify the programme “in the present economic climate”.

The problem for Five is that it has already signed up to expensive long-term contracts for programmes such as Neighbours, CSI and Home and Away. Its accounts show that its long-term obligations ballooned during 2007, when Jane Lighting, then chief executive, spent heavily in an effort to woo audiences.

At the end of 2007, the channel had committed to spend £669 million on programmes at some point in the future, headed by a £300 million ten-year deal to buy Neighbours, compared with £296 million in 2006. It may prove possible to renegotiate the Neighbours deal, because the Australian soap is made by Fremantle, the separate production division owned by RTL, meaning that Five would benefit at the expense of Fremantle.

Five has never been more than modestly profitable since it was launched in 1997, although it is understood to have made money in 2008, with Gerhard Zeiler, RTL’s chief executive, predicting that its results will be ahead of those of the not-for-profit Channel 4. Five broke even in the first half of 2008, but an improvement in the second six months means that it is expected to make a slim profit in the full year.

A spokesman for Five said: “As this review is still ongoing, any conjecture as to its eventual outcome is entirely speculative.” However, he added that the broadcaster was looking at its options so that it could “protect and even increase peak-time budgets”.

RTL will reveal more about how well Five is faring when it reports its annual results in March.

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