The future of the highly rated FilmFour production company will be announced on Tuesday after warnings of job losses at Channel 4.

The television company has been searching for international partners to help with its distribution and finance.

Without such a deal, it is thought the loss-making company will be scaled down to produce films mainly for television.

Channel 4 chief executive Mark Thompson warned on Monday of a radical overhaul of the TV station, with the likelihood of substantial job losses.

Creating a leaner, less hierarchical Channel 4 will mean employing fewer people

Mark Thompson, Channel 4

FilmFour Ltd has produced many of Britain's most successful films over the last 20 years, from Trainspotting and the Crying Game to Four Weddings and a Funeral.

Despite international success, little of the profit came to Britain, so four years ago, the company was set up as a stand alone studio to rival those in Hollywood.

Although it had successes like East is East, it suffered a series of box-office flops, including Charlotte Gray and The Parole Officer.

Fight for survival

Mr Thompson told staff to expect substantial job cuts ahead of a crucial board meeting on Monday evening on the fate of FilmFour Ltd.

Mr Thompson, the former head of BBC Television, said he wanted to create a leaner company, employing fewer people, with eight commissioning departments instead of 13.

He added a smaller staff was vital if the channel was to recreate its bold, risk-taking spirit.

Trainspotting was a major hit

Changes in media ownership rules mean there could soon be a single ITV company, which could be American-owned, while BSkyB could own Channel 5.

Mr Thompson said the channel had to "box clever" to compete with larger rivals.

"We've got a real fight on our hands," he told staff.

"If we don't change the schedules, the way we work, the structure and scale of the organisation very radically indeed, we are not going to succeed.

"It's going to be an exciting and positive time to be at the channel, but it's also going to be a bumpy time. Creating a leaner, less hierarchical Channel 4 will mean employing fewer people."

Mr Thompson did not reveal how many of Channel 4's 1,100 employees could lose their jobs.

Closure reports

A number of newspaper reports suggested on Monday that FilmFour Ltd could close completely.

But the publicly-owned channel is insisting the worst-case scenario would only see it scaled down.

FilmFour's Once Upon a Time in the Midlands was a hit at Cannes

FilmFour Ltd is a part of 4 Ventures, Channel 4's commercial department, which also includes the broadcaster's pay-TV channels and internet interests.

It is a separate operation to the FilmFour subscription TV channel, which broadcasts movies on cable and satellite TV.

FilmFour's recent venture into producing fewer films but with bigger budgets has not been a success.

Current release Birthday Girl, starring Nicole Kidman, has had mixed reviews, but looks set to be another flop, taking only �240,000 over its first weekend.

It has not had a major box office hit since 1999's East is East, an affectionate comedy about an Asian family in 1970s Salford, which took �7.2m in the UK.