Page last updated at 05:04 GMT, Wednesday, 4 March 2009

Troubled ITV set to slash costs

Ant & Dec
ITV presenters Ant & Dec may be released from "handcuff deals"

ITV is expected to announce a series of cost-saving measures when it reports its annual results later.

The commercial broadcaster has been hit by a sharp drop in advertising revenue, made worse by the economic crisis.

BBC media correspondent Torin Douglas says ITV's advertising revenue has fallen as audiences switch to niche channels and the internet.

Hundreds of jobs could go, with unions fearing most of the losses will come from the Kirkstall Road site in Leeds.

ITV, which has made no secret of its financial problems in recent months, faces substantial debts and has a pensions deficit.

Merger idea

It has been urging the government to relax its programme obligations and advertising rules, and even floated the idea of a merger with Channel 4 and Five - but has been told that this would break competition policy rules.

Analysts say its options include selling the website Friends Reunited, trimming its programme budget and making drastic job cuts.

ITV is in a desperate state and the management is not managing the situation
Gerry Morrissey
General Secretary of Bectu

The Leeds studios, the original home of Yorkshire Television, has seen production shelved on the series Heartbeat and its spin-off, The Royal.

Gerry Morrissey, General Secretary of broadcasting union Bectu said staff there were "the most demoralised workers in British television" and were "disappointed at the way the company has been run down".

He added: "ITV is in a desperate state and the management is not managing the situation."

ITV's commercial director Rupert Howell admitted this month that it was "scrapping for its life" as he pleaded with the government to let it make money from product placement.

Any merger with Channel 4 or Five is likely to be resisted by those broadcasters, and by the advertisers that ITV needs.

Friends Reunited

Advertising revenue is down more than 15% so far this year at ITV and hopes of an Easter boost are fading.

Our correspondent said: "The internet has broken the traditional TV advertising model and in trying to get a slice of the action, ITV bought the wrong internet company - Friends Reunited - at too high a price."

It paid £120m for the website in December 2005, planning to use the acquisition to expand in areas such as dating, recruitment and classifieds.

But the social networking boom that followed, with sites such as Facebook, MySpace and Bebo, put pressure on the Friends Reunited brand.

BSkyB already holds an 18% stake in ITV and no other investors are queuing up to buy the company, despite its low share price.

ITV has already cut back on programme-making, and may now have to sell Friends Reunited for a loss.

It may also have to release the "handcuff deals" with its biggest stars such as Ant & Dec and Simon Cowell.

  • ITV was launched in 1955 following the Television Act of 1954, which for the first time made the launch of a commercial television channel possible. It was made up of 15 broadcasting regions, each run by a separate company.
  • The Broadcasting Act of 1990 allowed regional companies, under specific conditions, to merge for the first time. It paved the way for the consolidation of ITV - the first merger taking place in 1994, with Granada buying LWT.
  • Six years later, Granada owned six regional licences, Carlton owned five, and in February 2004 ITV plc, created when those two companies merged, was born.
  • ITV2 was launched in 1998, ITV3 in 2004 and ITV4 in 2005. CITV and ITV2 +1 launched in 2006.

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