The producer of home-grown box office hits including the Crying Game and Mona Lisa has described the closure of FilmFour Ltd as a "black day" for British cinema.

Stephen Woolley said Channel 4 was closing down a company with great potential, despite not producing a money-spinning feature since East is East in 1999.

He said Channel 4's chief executive, Mark Thompson, should have taken a longer term view of a company that has become a cornerstone of the UK film industry, and was a key distributor in the UK, backing leftfield hits such as Monsoon Wedding and Bully.

"They have had extraordinarily successful hits, like the Madness of King George and East is East. They have had a great run, but just not over the past couple of years. It is a pity they are doing it this way.

"In Hollywood they change the personnel, but don't close down the company. I just hoped they would have had more patience," he said.

FilmFour Ltd will be folded back into its parent company at the cost of up to 60 jobs, marking the end of an ambitious expansion that saw the venture moving into the blockbuster league with Charlotte Gray.

"FilmFour has been a fantastic support to me. It is a really black day. They were taking all the right steps to being in a stronger position to exploit the titles. Unfortunately they did not have the hits. From personal experience I can tell you that two bad years in distribution sucks the money away."

Mr Woolley has worked with Channel 4 since the early 1980s, when it financed Neil Jordan's acclaimed debut, Angel, as a made-for-TV film. Mr Woolley said the channel was likely to return to those roots, after deciding it could no longer shoulder the losses of running a mini-studio.

"I suspect they will be making things like Billy Elliot, keeping to more local films, and they will not be trying more ambitious titles like Charlotte Gray. Which I think is sad. Hopefully, there will be more Full Montys," he said.