IT IS the Channel 4 board’s very own version of Big Brother. Instead of some would-be reality TV celebrity being thrown out of the house, the drama hinges on which of the channel’s two top executives will be shown the door.

Luke Johnson, the Channel 4 chairman, will have to decide soon whether to back or sack Andy Duncan, his chief executive, or Kevin Lygo, his director of television, both of whom are also board directors and are said to be at daggers drawn.

One senior insider said this weekend: “It’s a dysfunctional family with all the associated squabbles. It is undermining the station.” The breakdown at the top comes as analysts predict that the state-owned channel will face a £100m plunge in its advertising revenues this year while waiting to see if Lord Carter, the communications minister, will throw it a lifeline from the BBC. Options for its survival include giving it funds from the BBC’s licence fee revenues, merging it with BBC Worldwide, the corporation’s commercial arm, or a private merger with Five or ITV.

Lygo, whose background is in entertainment and whose main hobby is collecting art, would not be unhappy to see the back of Duncan who, before he became the channel’s chief executive in 2004, had spent his career promoting Flora and PG Tips at Unilever before moving to the BBC as director of marketing. Their incompatibility is hampering the channel’s campaign to seek financial security.

Johnson is to leave as chairman in January 2010 after six years and wants to sort out the power struggle between his two feuding top executives before he departs.

He hired Duncan not long after he became chairman in 2004 but has not seen eye to eye with his chief executive for some time.

Duncan, who likes to dress in T-shirts for all occasions, is the antithesis of the average Channel 4 viewer. The churchgoing suburbanite, who lives in leafy Surrey, was criticised in 2007 for being slow to respond to public anger about the late Jade Goody’s racist insults against Shilpa Shetty, a fellow contestant on Celebrity Big Brother.

The channel’s handling of Carol Vorderman, who quit as a presenter of Countdown last year after she was asked to take a massive pay cut, also won its bosses few plaudits.

Duncan and Johnson have been criticised for “crying wolf” too early and too often about the channel’s finances. Going with a begging bowl to government while Duncan earned £1.2m a year and Lygo’s wage packet had passed £1m was a mistake. Earlier this year it was revealed that 91 people at the channel, which is one in nine of the entire staff, earned more than £100,000 a year.

Johnson, who ran the Pizza Express chain before he bought and later sold the Ivy, a London restaurant favoured by media types with expense accounts, had been an unexpected choice as Channel 4 chairman. The son of Paul Johnson, the right-wing writer, he relaxes by reading business books, writing a column for the Financial Times and playing tennis.

He can also express some surprising views. At a recent board meeting he suggested that if the finances of the channel really were that bad – there will be an expected funding gap of £150m by 2012 – the channel could get rid of its dramas, the most expensive form of programming. The remark angered some of his fellow board members, although he says he meant it as a joke.

Yet Channel 4’s dramas, such as its award-winning The Devil’s Whore and the recent Red Riding trilogy, and its films – most notably the Oscar-winning Slumdog Millionaire – bring it much needed plaudits to justify its protection asa public corporation.

Even if Johnson’s was a throwaway remark, it reveals just part of the confusion at the heart of the channel, which is now more than a quarter of a century old. As one commentator put it: “It is the sort of problem family which the channel itself could look at in one of its documentaries.”

Part of the broadcaster’s dilemma is that its main channel offers programmes of extremes – from its highly regarded news and dramas to series such as Big Brother and to an unhealthy preoccupation, in its documentaries, with fat people and those who enjoy unusual sex lives.

Big Brother has certainly brought the station some much-needed advertising income and viewers, but at the cost of opprobrium heaped on it for its crassness.

David Puttnam, Channel 4’s deputy chairman and a former film producer, has long believed that Big Brother has not helped the channel’s political case.

A source at the broadcaster said: “Nothing will be decided about the channel’s leadership until we have sorted out the structure of the channel in the next month or so.”

4 options

The options to save Channel 4:

— Merger with BBC Worldwide, the corporation’s commercial arm. C4 would still control programming; Worldwide would run commercial activities

— “Top slicing” some of the BBC’s £3.4 billion licence fee income to pay for C4 public service broadcasting. The BBC opposes this

— Merger with Five, which is itself suffering financial difficulties

— A slimmed-down status quo. C4 continues on its own as a public corporation funded by advertising and some sponsorship but with a smaller budget

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