ITN's future under threat as pension deficits spiral by 75%
Friday 29 May 2009
Independent Television News (ITN), the production company which makes ITV's News At Ten, is in danger of collapse after it revealed a growing black hole in its pension fund.
The group, which also produces Channel 4 News fronted by Jon Snow, blamed the slump in the global equity and debt markets for a 75 per cent leap in its pension deficit last year. It disclosed the issue in its 2008 annual report, released this week.
The directors said the spiralling deficits, which rose from £22.8m in 2007 to £39.9m, put "significant doubt upon the group's and company's abilities to continue as a going concern".
The ITN board has been warned that "the pension scheme [is likely to] show a deficit that is significantly higher than this when the valuation is finalised". The group's auditor Deloitte signed off on the accounts but added that the deficit "may require funding contributions in excess of the company's expected cash resources. This indicates the existence of a material uncertainty."
A spokeswoman for ITN said that the scheme's actuary was still working out the size of the deficit "so we can't put a value on it at this stage".
She added: "We are in discussions with the trustees and are committed to agreeing an appropriate recovery plan which balances our ability to deliver more funding into the scheme while continuing to grow the business."
The discussions are likely to involve the company's major shareholders ITV, which owns 40 per cent, Daily Mail & General Trust, United Business Media and Reuters, which own 20 per cent each. The pensions regulator is also likely to be involved.
The company said it expected to reach a solution by March next year, which was "the timescale required to agree the valuation assumptions and deficit recovery plan".
Revenue at ITN rose by 9 per cent last year to £105.4m thanks to "increased expenditure" on its contracts with Channel 4 and ITV, as well as a full year of revenue from Setanta Sport's news service. It posted pre-tax profits of £4.1m up from £2.8m from improved contributions from its commercial business arms and a lower charge on salary security costs.
ITN was this month the focus of takeover rumours, with the Getty Images photographic agency named as a potential suitor. ITN's chief executive Mark Wood, who quit earlier this year and will be replaced by John Hardie, was paid £366,000.
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