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Last Updated: Wednesday, 7 March 2007, 11:43 GMT
Q&A: What lies ahead for ITV?
Dancing On Ice stars Clare Buckfield and Andrei Lipanov
Dancing on Ice is one of ITV's key Saturday night shows
Commercial broadcaster ITV has unveiled an 8% drop in full year pre-tax profits to 288m.

New chief executive Michael Grade has vowed to shake-up the company, but what changes could be on the schedules for the company?

Why have ITV's profits dropped?

The straightforward explanation is that advertising revenues have dropped as a result of a "challenging market".

Overall, advertising revenues slipped 8% to 1.49bn, led by a fall at the firm's flagship ITV1 channel.

The more detailed explanation is that ITV is losing out partly because of its falling audience share, which is turning advertisers off its channels.

Another reason is its contract rights renewal scheme (CRR) which makes it more difficult for ITV to make money from ads.

The CRR scheme - agreed as part of the deal that allowed the creation of a single ITV company by merging Carlton and Granada three years ago - directly links ITV1's advertising revenues to its audience share.

Why are viewers switching off ITV?

Former BBC chairman and new ITV boss Michael Grade has laid the blame firmly at the feet of the broadcaster's programmes.

He says the firm has "stayed with shows too long, lost its supremacy in the 9 o'clock drama" slot, and "copied" content from other channels.

Mr Grade also said the firm had become bogged down in bureaucracy and not taken enough risks for fear of losing ratings.

But the firm is also fighting against a background of a fragmenting audience.

Since the advent of satellite and cable TV, viewers have been turning away from traditional broadcasters.

In 1957 - just two years after its launch, and with only two channels to choose from - ITV could command an 80% share of the potential TV audience.

That dwindled to just half of the TV audience in 1982, once the UK TV offering rose to four channels.

In February of this year, with countless niche channels available on cable, satellite or Freeview, ITV1's share of the total TV market was just 19.7%, against 22.5% for the publicly-funded BBC1, Broadcasters' Audience Research Board figures show.

What is ITV doing to stem the decline?

Innovation, originality and risk-taking are all needed to drive up audience share, Mr Grade argues.

The company has vowed to continue pumping 1bn a year into its programming schedule.

"There is a lack of innovation in our programming, partly resulting from a fear of ratings failure," Mr Grade added.

He also said he would to improve delegation as "the company has developed a tendency towards bureaucracy".

One of his major priorities will also "fixing'' ITV1, which is looking "a little tired".

Rather than holding onto formats that are past their sell-by date, the broadcaster aims to strengthen its commissioning strategy to bring in more original shows.

The group is also working on improving its digital offering and improving its online businesses in an effort to lower its reliance on advertising and find new revenue streams in a fragmenting media world.

What other problems does ITV face?

The broadcaster is currently caught up in a in a scandal over premium-rate phone-in quizzes, a move that has prompted the group to suspend such competitions.

The problems - which are being investigated by Ictsis - affect shows such as This Morning, X-Factor and Dancing On Ice.

But ITV is not the only company affected by the investigation - separate investigations are also being held into Channel 4's Richard and Judy and the BBC's Saturday Kitchen.

Mr Grade promised the group will take a "time-out" to examine its system and make sure it sticks to strict guideline - a move he says will ensure that the public can trust its phone lines.

Any other hiccups on the horizon?

ITV is also currently in the middle of what BBC business editor Robert Peston calls a "life-or-death struggle between Virgin Media and BSkyB".

Following a possible merger approach from Virgin Media - then called NTL - last year, BSkyB snapped up a 17.9% stake in ITV in an effort to block any possible takeover moves.

ITV has now voiced its concerns over the buy. Its board says Sky's holding would give it the power to block any big deal that ITV might want to do.

As a result Sky's stake is now being investigated by industry watchdog Ofcom and the Office of Fair Trading.


SEE ALSO
ITV must do better, admits Grade
07 Mar 07 |  Business
ITV suspends premium phone-ins
06 Mar 07 |  Entertainment
Ad ban plan 'threatens TV shows'
05 Feb 07 |  Entertainment
ITV rattled as ad revenues fall
19 Dec 06 |  Business
NTL ends takeover interest in ITV
06 Dec 06 |  Business
How can Grade revive ITV's shows?
28 Nov 06 |  Entertainment

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