IF SHILPA Shetty wins Celebrity Big Brother, as expected tonight, the bookmakers are unlikely to be sharing in the national sense of vindication.

Thanks to a deluge of large bets on the Bollywood star that saw her rocket from rank outsider to runaway favourite after she was racially abused by Jade Goody and her cohorts, the bookies expect to lose £2 million.

Well before the votes started coming in, Ladbrokes was describing it as the "biggest sympathetic vote in history".

At least the bookies will be able to move on to some other piece of excitement, however. The same cannot be said of Channel 4, the Dr Frankenstein that brought this monster to life.

Everyone from the tabloids to rival broadcasters to members of the government have queued up to express outrage as more than 45,000 public complaints rolled in over the past couple of weeks.

Chancellor Gordon Brown felt the need to apologise to his hosts during his trip to India as enraged citizens took to the streets in protest, and Carphone Warehouse withdrew its £3m sponsorship of the Endemol-produced show.

Channel 4 chief executive Andy Duncan and chairman Luke Johnson's bland public responses were like a textbook tutorial in how not to handle a PR crisis, and last week's mealy-mouthed announcement of a review from the board was not much better.

To top it off the broadcaster chose the same day to launch the new series of reality show Shipwrecked, which included another young woman making racist comments. Hundreds of more complaints headed for Channel 4's Horseferry Road HQ as a result.

"Channel 4 has taken a dent of the kind that it's never had before. It's been in plenty of rows, but the thing that's different on this occasion is that it has no friends," says Philip Schlesinger, professor of cultural policy at the University of Glasgow.

Even Matt Baker, the likeable head of communications at Channel 4 whose job could now be on the line, describes it as "very far from ideal".

The timing could not be worse for the broadcaster. Two months from now, TV watchdog Ofcom is due to publish a study into Channel 4's funding and public service broadcasting to decide whether it needs public subsidies after digital switchover.

Channel 4 has sought to make its case in recent months, even selling its money-grubbing Quiz Call channel to improve its image last autumn.

As ironic as that now seems, its argument for more assistance goes something like this. As digital switchover approaches in 2012, the free broadcasting spectrum that Channel 4 receives, in exchange for greater public service broadcasting commitments than ITV or Five, will lose its value.

Duncan and co contend that as more homes have wider ranges of channels, the extra competition will reduce Channel 4's audience share and hence also its advertising revenues.

In fact, they point out, this has started already, with the main channel's ad revenues thought to have fallen by about £40m to £665m in 2006. This has been offset by growth at spin-off channels such as E4, but profits are likely to be down by about two thirds because of the rising cost of renewing hit shows such as Big Brother and Deal Or No Deal.

While some might point out that it is spurious to link flat overall ad revenues and the effect of rising programming costs on profits, Channel 4 insists that the rot is only starting.

"We expect to start losing money either this year or certainly next year," says Baker, adding that by 2012 the broadcaster expects this to amount to a deficit of around £100m a year.

It will ultimately be for Ofcom to decide whether it accepts this forecast, but it is certainly contentious. For one thing, Channel 4's audience share has actually been rising in the past couple of years, and certain former board members point out that the figures depend on the group's strategy.

As one former board member puts it: "It's not clear that Channel 4 does need overt government assistance. There is another model that's more commercially vibrant with a more limited public service. It involves restricting public service output to the main channel, which is the strategy that was followed by Duncan's predecessor Mark Thompson."

Before Ofcom can decide whether Channel 4's assessment of its future is correct, it must first decide whether it is satisfied that its public service programming is in line with statutory requirements.

Since this is the output that loses the broadcaster money, the size of any deficit will depend on how much Ofcom wants it to produce. Depending on who you ask, Channel 4's public service output either amounts to a feast of award-winning programmes and a counterweight to the BBC, or a few isolated chunks in a commercial gloop of Wife Swaps, Desperate Housewives and Big Brothers.

Some observers point out that if Ofcom does tell Channel 4 to shape up it might conclude it needs more assistance to do so. If Jade Goody increased the perception that the channel needs to do more, she could yet help it grow bigger after switchover.

On the other hand Ofcom could well ask Channel 4 to contribute by cutting its costs, in the same way as the BBC has done in the past couple of years.

Matt Baker argues this is unrealistic. He says: "Two or three years ago we cut close to 25% of our workforce, so Channel 4's been through quite a rigorous cost-cutting exercise.

"You also need to remember that we are a publisher broadcaster. Unlike the BBC, we don't make our own programmes. We only have 850 staff, so there is only a limited amount we can do with our cost base."

Others point out that this makes no mention of programming costs. The £500m or so spent on the main channel's budget provides a much lower return per point of audience share than the likes of Five.

If Ofcom decides Channel 4 does need more assistance, Duncan and his team have put forward various possible solutions. The most likely is that the BBC picks up the expected £14m cost of turning Channel 4's transmission network digital. Culture secretary Tessa Jowell has said she supports this, so it looks almost certain to go ahead.

OTHER options include giving Channel 4 free digital spectrum to launch more TV and radio channels, reduced public service broadcasting requirements, and perhaps even a portion of the BBC licence fee, although Duncan has made it clear that he favours that the least.

Ofcom could also end up awarding Channel 4 the contract to be public service publisher, worth £50m to £100m, which it is vying to launch as a new slice of public service.

We will not know what it recommends until the summer, after which it will be up to Tony Blair's successor to decide. Assuming that's Gordon Brown, some half-jokingly suggest that the recent broadcast of The Trial of Tony Blair might have helped the broadcaster. On the other hand, Brown had to apologise in India and will have been reminded that Channel 4 is not subject to the kind of accountability as the BBC Trust exercises. Then there is the stinging BBC licence fee settlement, which Brown is thought to have instigated. Will he not be just as tough on Channel 4's requests for help?

As Schlesinger says: "Brown is not seen as public-service-friendly. There are recurrent rumours that the Treasury thinks that privatising Channel 4 might be a good way of raising some cash.

"Where would we be then? The BBC would be the only public service broadcaster, and I think that's a dangerous situation."