JOBS will be slashed at ITV, the broadcaster confirmed yesterday, as it announced a 28 per cent drop in profits prompted by a slump in advertising.
Michael Grade, the executive chairman attempting to turn around the firm's fortunes, admitted it was facing problems as the digital era dawns and the economy tightens.
John Cresswell, ITV's chief operating officer, said there would be budget c
uts in areas such as broadcasting, production and sales and these would translate into job cuts, although he would not give details. Analysts said such cuts could number up to 600 – 10 per cent of ITV plc's staff.
Mr Cresswell said the firm planned to shed an extra £35 million by the end of 2010. It had already announced plans to cut costs by £41 million by the end of 2008 and by £40 million from the end of 2009 through cuts at its regional operations.
Mr Grade warned of a sharp deterioration in television advertising ahead, claiming sales for next month "displayed a level of volatility we haven't seen".
Shares – already half their value of a year ago – tumbled nearly 6 per cent yesterday, with investors disappointed by a 50 per cent cut in ITV's half-year dividend. The shares closed at 43.60p.
ITV reported underlying profits of £91 million, but in another sign of deteriorating advertising outlook the group wrote off £1.6 billion from the value of broadcasting licences bought in 2000 and 2004.
Mr Grade vowed that a strong autumn schedule – including a return of hits such as I'm A Celebrity... Get Me Out Of Here! – would see the company outperform the market. But the former BBC chairman said the group's five-year turnaround strategy, launched after he joined at the end of 2006, was "dependent on the economy".
He said there was now an urgent need for the government and broadcasting regulators to alleviate the company's contract rights renewal scheme, which allows advertisers to cut spending on ITV1 if ratings decline. He said it represented a "£300 million burden" on the company.
The broadcaster's net advertising revenue for the ITV family – including digital channels – crept up slightly less than 1 per cent, but for the flagship channel ITV1, the figure dropped 2 per cent. Ad revenues comprise about 70 per cent of total income.
The ITV family's share of commercial impacts – which measures how many people are viewing adverts – was down 5.1 per cent for ITV1 and flat overall.
The full article contains 419 words and appears in The Scotsman newspaper.
