Grade gets £1bn programming boost to stem slide in ITV's market share

Michael Grade, ITV's incoming executive chairman, will have about £1bn to spend on strengthening the broadcaster's 2007 programming line-up after the company pledged to maintain its content budget next year.

Mr Grade controversially left his role as BBC chairman and joined ITV last month. The media veteran has said ITV needs to focus on improving its programming to stabilise viewing market shares and advertising revenue as the country's largest commercial broadcaster recovers from a tumultuous year.

The broadcaster has struggled to maintain its viewing share in the key 18 to 34-year-olds market despite the continued success of Coronation Street and I'm A Celebrity Get Me Out Of Here. It has dumped other successful programmes including Footballer's Wives and Bad Girls but remains under pressure to freshen up its programming.

ITV spent about £1bn developing its programming during 2006 with the lion's share of that budget ploughed into its flagship ITV1 station. But that figure was higher than in an average year due to the cost of broadcasting from the football World Cup in Germany so many analysts had expected the budget to decline.

ITV said it expects to spend £815m on ITV1 in 2007 as it looks to claw back some of the advertising spend that has migrated on to the internet.

ITV reported that advertising revenue slipped 12.5 per cent at ITV1 over the past year despite the station remaining the most popular among viewers in peak times. The station had a market share of 27.3 per cent at peak times compared with BBC1's 24.5 per cent share.

There was some relief on the advertising front as the company's digital channels grew advertising revenue 40 per cent. As a result of the surge in advertising, the company has hit its £150m revenue target for the digital channels a year earlier than it had anticipated.

Yet the rising number of people tuning into digital television also affected ITV's ability to captivate viewers during advertising breaks. The company's share of commercial impacts - a measure for gauging how effective a broadcaster is at drawing viewers to the commercials it shows - declined more than 10 per cent over the past year at ITV1. The measure showed a 37 per cent rise at its digital stations.

ITV said it expects to deliver about £40m of cost savings by 2008 as it seeks to cope with the more challenging environment.

John Cresswell, interim chief executive of ITV, said: "2006 trading remains in line with current market expectations and, while the airtime sales environment remains challenging, our digital channels continue to perform strongly."

ITV enters the new year with competitor Sky holding a near-18 per cent stake in the broadcaster which it purchased in November. The stake in effect blocked an attempt by NTL to acquire ITV. Regulators are reviewing the situation, provoking speculation that NTL might return next year if Sky's ownership of a stake in ITV is deemed to be against the public interest.