ITV to cut £40 million as Q1 profits decline

Independent British broadcaster ITV, also known officially as Channel 3 reported a 14-per cent decline in first quarter revenues but said that big name television shows like Britain's Got Talent will lead the company on to the path to a successful future.

The broadcaster unveiled plans for another £40 million in cost savings.

The group's executive chairman, Michael Grade said the company would emerge extremely successful but also said that the impact of falling revenues is impacting the company hard.

ITV posted net revenues of £425 million for the first three months of the year, which was down from £492 million a year ago. The broadcaster has plans to save a total of £215 million in 2010 and £285 million in 2011 in a cost cutting measures including reducing its workforce by 1,600.

The compnay's net television advertising revenues declined 15 per cent though this was better than the industry average of 16 per cent but better than the 17 per the group expected.

But continuing adverse economic conditions are expected to push down these further to 18 per cent in May according to the broadcaster.

Grade told investors that conditions in the advertising market are the worst he has experienced in 30 years, but said ITV had largely retained its share of television advertising and insisted that the company had a bright future.

Grade said the advertising market remained weak, however, ITV continued to outperform the market reflecting the continued strength of ITV's on-screen performance particularly in peak time and additionally the company continued to hold its content revenues in tough domestic and international markets. He added that the company was attracting record users on-line.

He said that the company had a fantastic future as long as it produced like programmes like Britain's Got Talent that attracted millions of people.

The company said cost savings would be made in a number of areas including slashing overheads in its UK studios business and cutting so-called red button and interactive services to focus on online video production.

According to analysts ITV's troubles have coincided with the broadcaster disquiet over its worsening financial position and last month Michael Grade, executive chairman announced that he intended to go part-time by the year-end and that the company start looking out for a new chief executive. Grade was paid £934,000 last year said that it was clear to him that it was the right moment for him to be handing over to his successor.

ITV had earlier sounded out shareholders over a rescue rights issue following the £2.7 billion loss it suffered for 2008 but then decided that the cash call was not needed. Instead it raised £58 million in bonds and presented plans to sell Freeview frequencies valued at £200 million.

ITV chief operating officer, John Cresswell, that since the downturn came at the year end the rate of decline would slow down by the year-end.

Cresswell pointed to a deal with production houses Freemantle Media and YouTube that will monetize online viewing of ITV video content. He said that there was a marketing benefit to online interest that helped boost audience figures.