Channel 4 is slashing costs at its commercial arm, 4 Ventures, in an effort to halve the £70m-a-year losses made by the division that houses the E4 and FilmFour pay-TV channels.

Cutbacks are expected across the board as part of a plan to reduce losses to £35m next year.

But the brunt of the cuts will be felt at Channel 4's interactive division, which operates the channel's websites.

Educational programming business 4Learning is also expected to have its budget cut.

However, investment by FilmFour Ltd in movie production will not be affected.

None of Channel 4's websites is expected to close, but some may be streamlined after a review of the interactive operation by the 4 Ventures managing director, Rob Woodward.

"We are not expecting any sites to disappear," a senior Channel 4 source said. "But some may be scaled back or refocused.

"Like a lot of other media companies we haven't found as many ways of making money out of the internet as expected."

Channel 4 Interactive's sites include E4.com, FilmFour.com, Cricket4.com and the joint venture with independent producer Ideal World, 4Car.co.uk, which has already moved into operating profit.

The interactive division made an operating loss of £14.9m in 2000.

Reducing this deficit will go a long way to achieving the £35m reduction in losses Channel 4 is seeking from 4 Ventures.

Most of the rest will come from cutting the start-up investment in entertainment channel E4.

This year E4, which launched in January, will make an operating loss of around £40m. But in 2002 that figure will be cut to £20m as the start-up funding is reduced.

E4 is already on target to become Channel 4's second biggest commercial business in terms of turnover.

FilmFour will cut its loss from £14.8m last year to around £11m in 2001 and is on track with its business plan, according to Channel 4 insiders.

"Our ambition now is to drive the 4 Ventures businesses to break even more quickly," the source said.

"Some of that will be achieved through cost efficiencies, mainly in our internet operation, and some through setting more aggressive revenue targets."