Channel 4 has today informed media regulator Ofcom of its decision to withdraw from 4 Digital Group.
The consortium was awarded a licence for the second national commercial DAB radio multiplex last year.
They were expected to provide ten linear national services including a national version of Sunrise Radio.
Channel 4 also said it would closing its entire radio division with the loss of up to 15 jobs, saving an estimated �10m in 2009.
The Channel 4 chief executive, Andy Duncan, who was previously a big champion of Channel 4’s radio ambitions, told MediaGuardian: “We’ve taken this decision very reluctantly.
“We’ve pursued our radio plans in good faith and continue to believe DAB has a strong future and that we could make a return from radio in the medium term.
“Frustratingly, our plans have been overtaken by a drastic recent downturn in our revenues and we will have to forgo this future profit stream.
“We can no longer afford the short-term investment necessary given that we are having to cut so deeply across all parts of the organisation.”
In a statement Ofcom said: “Ofcom recognises that the economic environment is very challenging and that all organisations need to make decisions in light of the circumstances they face.
Ofcom and the Government have supported DAB through the licensing of services and Ofcom continues to believe that DAB offers listeners real benefits. There are now 7.7 million DAB devices in the UK with 11 per cent of all radio listening through these.
“Ofcom will meet the other members of 4 Digital Group over the next few days to discuss how they propose to take matters forward. Ofcom is also in discussions with other multiplex operators and the BBC, to consider how best to secure a viable outcome which is in the interests of radio listeners and the industry.
“In addition, Ofcom continues to support the work of the Digital Radio Working Group which is considering the obstacles to the further take-up of digital radio.”