Three theatres in a West Sussex seaside town are to remain in the control of the council despite fears that budget cuts could threaten their future.
Worthing Borough Council asked for bids to run the Pavilion and Connaught theatres and the Assembly Hall in May.
It said 17 had been received, but none offered sufficient savings for the council, which needs to cut £4.5m from its overall budget over three years.
The Lib Dem opposition said it was disappointed at the council's decision.
The council said the theatres' management team had now been asked for a new business plan that would reduce the subsidies needed.
It would include introducing a ticket levy to improve the Connaught and Pavilion buildings and rethinking their entertainment programmes.
The Assembly Hall had been shown to be a great community asset which needed to be used more efficiently, it said.
"A great deal of work has been undertaken to ensure sufficient resources are available to continue current operations until 2013," said Conservative council leader Paul Yallop.
"It has always been our intention to maintain good theatre provision in Worthing but we cannot ignore the fact that the level of public subsidy necessary is unaffordable in the medium to long term."
Lib Dem leader Alan Rice said the theatres currently lost £3,000 per day.
"It is clear there is a glaring need for improved theatrical management," he said.
"For seven years Worthing Tories have dithered over the theatres while an annual sum of well in excess of £1m has been lost.
"I looked forward to finding a solution to keep the theatres open.
"It is disappointing the officers considered none of the bids were good enough to meet that aim."