UK broadcaster Channel 4 is in talks to bring in a partner for its loss-making film arm FilmFour, chief executive Mark Thompson said on Wednesday.

The statement came after reports in the local press said the broadcaster had already decided to make significant cuts at the film operation, which has suffered high-profile disappointments such as Charlotte Gray and Lucky Break. Thompson aims to find a partner instead of cuts, but is impatient to close a deal after some six months of talks. Sources said a decision one way or the other is expected in the second half of this year, even as early as next month.

If a partner cannot be found, Channel 4 executives are considering pulling out of large-scale international productions such as Charlotte Gray and focusing on lower-budget UK films. The most dramatic option being looked at is folding the stand-alone film operation back into the main channel under the wing of drama chief Tessa Ross.

'Channel 4 has made no secret of the fact that it is looking at a number of options for its stand-alone film business FilmFour," Thompson said. "These options include bringing in a partner to the business and we are in ongoing discussions with interested parties. We are also looking at further strengthening links between Channel 4 and FilmFour Ltd, including refocusing FilmFour Ltd to produce films directly for the main channel."

Potential partners are thought to include Focus, the Universal Studios specialist division recently formed around New York-based Good Machine. FilmFour declined to comment, but Focus chiefs David Linde and James Schamus are known to be fans of FilmFour chief executive Paul Webster, with whom they recently collaborated on Buffalo Soldiers. FilmFour has just partnered with Ted Hope, the Good Machine co-founder who segued to a production deal, on Mondo Beyondo, a post holocaust comedy to be directed by Terry Gilliam.

Such a partnership would also reunite Webster and FilmFour with Michael Jackson, chairman and chief executive of Universal Television. The former Channel 4 chief executive appointed Webster to head film operations and allowed him to spin off FilmFour from the main channel, moving the division towards large-scale international co-productions.

FilmFour's biggest disappointment was arguably Lucky Break's UK release, which saw the venture pump around $2.9m (£2m) into a p&a campaign only for the film to open on a disastrous $501,000. Charlotte Gray, the operation's biggest budget UK production to date, has taken a disappointing $2m (£1.4m). Its biggest success this year came with low budget acquisition Monsoon Wedding, which has taken $3.2m (£2.2m) so far.

But Webster said in April in an interview with Screen International that he wanted one more year to "knock the company into shape". "I always said it was going to take five years," he said. "Hopefully we are turning a corner. Year five has just started."

The operation's upcoming production roster is laden with ambitious, large-scale, international productions. Paul Verhoeven's shipwreck epic Batavia's Graveyard is in development, while Mondo Beyondo could shoot this year. Other highly-anticipated productions ready to go this year include Walter Salles' Motorcycle Diaries and Edgardo Mortara, starring Anthony Hopkins and Javier Bardem.

FilmFour supporters argue that closing the operation would do little if anything to help the division's parent, 4 Ventures, achieve its publicly declared goal of eventually becoming a cash contributor to the channel. FilmFour recorded a $4.4m (£3m) loss in 2000, a disappointment compared to its $730,000 (£500,000) profit in 1999 but a trifle compared to 4 Venture's overall red ink of up to $101m.