Openly gay TV presenter Graham Norton is rumoured to be planning to return to Channel 4 to replace Paul O’Grady.

O’Grady, the openly gay comedian who used to play drag queen Lily Savage, has threatened to leave the channel after learning that his chatshow is to face a 50 per cent budget cut.

He told the Daily Mirror: “This credit crunch has become an excuse for bosses all around the country to fire people and save money. I would understand if my ratings were down and the show wasn’t performing but it consistently wins its slot and brings in good advertising revenue.

“I’d be mortified to do a show that’s third rate.”

Other reports have suggested O’Grady is to be axed by Channel 4 for refusing to accept an estimated 30 per cent pay cut. His contract is due to end in December.

Norton, who left Channel 4 in 2005 to join the BBC as one of its highest-paid presenters, is now said to be in talks with Channel 4. His latest show, Totally Saturday flopped but a new late-night chatshow is due to start later this year.

A source told the Sun: “Graham has enjoyed his time at the BBC, but it is highly unlikely he will be signing back exclusively with the BBC at the end of this year.

“Channel 4 are very keen to have him home. It’s where he started his television career and we are in talks about him taking Paul O’Grady’s timeslot.”

The source added: “Graham has a natural energy on TV and his forté is interviewing and entertaining people. So it would be a perfect show for him.”

However, Graham Stuart, managing director of Norton’s company So Television, told Broadcast magazine: “None of this rings true. I understand that everybody wants Graham but as far as So is concerned, we have worked long and hard to get where we are, which is beginning a new chat show on BBC1. That is our plan.”