Ofcom said on Wednesday that the decline in funding has left children starved of quality programmes with a diet of wall-to-wall cartoons.
But industry leaders claim Ofcom must take much of the blame because of its restrictions on food-and-drink advertising to children, which is costing broadcasters an estimated £39 million a year.
Hamish Pringle, the IPA director-general, said: "None of this is surprising and we warned it would happen. The revenue that has been denied to broadcasters by Ofcom represents a hell of a lot of quality programming."
Ian Twinn, ISBA's director of public affairs, said: "Nobody likes to say that we told Ofcom so - but we did. We've been happy to accept strict rules on advertising to children, but Ofcom has reacted to a political debate led by anti-business pressure groups."