ITV slashes jobs and budgets after £2.7bn loss

After slumping to a big loss last year, ITV is having to cut costs - including 600 jobs...

Last Updated: 31 Aug 2010

Troubled broadcaster ITV has been forced into drastic action, after a year in which it recorded a £2.7bn loss: it said today it would cut 600 jobs, scrap its dividend, and spend less money on programming in the next few years. Boss Michael Grade blamed the cuts on the slowdown in the advertising market, which pushed ITV’s ad revenues down 4% in 2008 and as much as 17% in the first quarter of 2009. It’s a tricky balancing act for Grade: in this tough market he desperately needs to boost the bottom line, but if his content is no good then he might end up with no advertisers at all…

ITV’s numbers were pretty grim today. Revenues for 2008 were actually pretty flat, at just over £2bn, but its operating profit of £211m was 32% down on last year. Throw in a huge write-down on the value of its broadcasting assets, and it ended the year £2.7bn in the red. And Grade is in no doubt what the major issue is: ‘Current conditions in the advertising market are the most challenging I have experienced in over 30 years in UK broadcasting,’ he said today (although he thinks his 17% fall in Q1 will actually be slightly better than the market average). Grade is hoping that the cost cuts – plus the sales of websites Friends Reunited and Scoot – will save up to £245m a year by 2011 and plug the holes in his balance sheet.

More significantly, he’s also chopping programme budgets – a bit of an about-turn from his previous content-led strategy. ‘Our priorities have to be aligned to the changed economic context,’ Grade said today – though he insisted it was no big deal, really. ‘We will probably go from eight hours down of drama ever week to seven hours,’ Grade told reporters today. ‘It’s hardly a decimation of drama on ITV.’ Erm… We suppose he’s technically right, but only in the sense that it’s actually more than a decimation (since reducing something by an eighth is more than reducing something by a tenth).

It’s a very different story over at the BBC, which appears to be in trouble for making too much money, rather than too little. According to the Times, BBC Trust chairman Sir Michael Lyons wants to block any further expansion of BBC Worldwide, Auntie’s commercial arm, because its healthy profits (£112.5m last year) are causing too much controversy among licence-payers – the argument being that it’s only able to make this much money selling content because the licence-fee subsidises the rest of the BBC's content production. We suspect Grade would agree, somehow…

One thing’s for sure: with both BBC Worldwide and ITV being linked with some kind of tie-up with Channel 4 (and possibly Five), it’s clearly going to be an eventful year for the big broadcasters...

In today's bulletin:

ITV slashes jobs and budgets after £2.7bn loss
Eurotunnel digs deep for first dividend
Are you being stretched?
SMEs bashed in the utilities
Crash Course: Seven steps to better marketing in a recession

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