Andy Duncan, chief executive of Channel 4 was forced to defend salaries paid to top executives at the broadcaster amid accusations by MPs that they were "grossly excessive".

When Mr Duncan the Culture, Media and Sport Committee that 80 of the broadcaster's 700 full time employees earned more than £100,000 a year, John Whittingdale, committee chairman and a Conservative MP said: "Many people would say 80 people paid over £100,000 a year was grossly excessive."

Mr Duncan countered: "That would be unfair. We need good people to do the job. We have had a very strong creative and commercial period.

"Having said that, and reflecting the difficult impact of the recession on Channel 4, certainly all of our better paid people didn't take a bonus last year and we have implemented a pay freeze."

Mr Duncan, who took home a total of £1.2m in 2007, agreed to take a 35 per cent pay cut in March in a bid to help cut costs at the broadcaster. His new deal will see him take home less than £600,000 for 2009.

Kevin Lygo, the Channel 4 director of television and content, who took home a total of £888,000 in 2007, has agreed to take a pay cut of 25 per cent this year, taking his basic salary of £772,000 to £575,000.

Mr Duncan also told MPs that Channel 4 was within weeks of reaching an agreement with the BBC’s commercial arm, over a future partnership.

He said that both Channel 4 and BBC Worldwide were enthusiastic about forming a “headline” understanding of how the deal would work.

An announcement may be made ahead of the Government's Digital Britain report in mid-June. In the longer term, he said there would likely be more detail “which would take longer to sort out”.

Asked if he was concerned that the move could make the BBC even more dominant, Mr Duncan said that areas of synergy would not create more dominance and one aspect being looked at was ploughing more money back into Britain from the rest of the world for British content.

Although a merger with Channel 5 had been mooted, a tie-up with the BBC's commercial arm is widely-considered the most likely option to help Channel 4 make up a £150million funding shortfall by 2012.

Mr Duncan said: “Five is a very troubled business...Although there could be some synergies with Five we feel they would be more than offset by the scale of losses.”

Last week, Channel 4 said that it would be cutting its programming budget by at least £60 million in the next year as it battled to cope with rapidly falling revenues. It also expects income to fall by 18 per cent in the first half of 2009, representing “the thick end of £100 million”.

Luke Johnson, the broadcaster’s chairman, said yesterday he did not think there was a crisis in Channel 4’s finances.

He said the channel was under pressure, “but we don’t feel there’s a crisis. We think we have challenges, we are under pressure to maintain investment in our output...

“And unquestionably the very robust and successful model that has existed for over 25 years of Channel 4 needs some adaptation if we are to continue to make a relevant impact.”

But he said that as time went on, with declining revenues, “there will be a threat of death by a thousand cuts”.

Mr Johnson said that a continuing decline in advertising revenue would create “unpleasant choices”.

Mr Duncan and Mr Johnson also dismissed rumours of tension in the Channel 4 boardroom. Mr Johnson said: “There is healthy debate within the board of Channel 4.”

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