Portugal's public broadcaster looks set to get cut in half if the government follows through on a promise to close down one of its two nationwide channels.

The broadcaster has amassed a multimillion dollar debt which in recent months led to accusations in the local film and TV industry of defaults on payment for content. Drastic measures were expected following the country's March 17 general elections which brought the centre-right Social Democrat party to power.

According to local reports, the new government has vowed not only to close one of the broadcaster's two channels, known as RTP1 and RTP2, but also to transform the remaining channel into an advertising-free model of public service.

Private channels SIC and TVI have long complained about RTP's dual practice of accepting government money and paid advertising. With the recent plunge in the advertising market, all of Portugal's broadcasters were suffering.

What's more, the country's film institute ICAM has been hurt by the crisis as well since two-thirds of its budget comes from TV advertising revenues through an investment policy.