ITV profits down by a third

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The Independent Online

ITV boss Michael Grade today announced a 35 per cent fall in annual profits following his first full year in charge at the commercial broadcaster.

The group saw pre-tax profits come in at £188 million for 2007, hit by lower revenues at flagship channel ITV1 and increased investment in digital channels.

But executive chairman Mr Grade remained upbeat about the future, saying the ITV channels as a whole delivered their first viewing increase since the early 1990s. The decline in advertising revenue at ITV1 also slowed, down 4 per cent last year compared to a 12% drop in 2006.

ITV's net advertising revenue was flat at £1.49 million for 2007. The figure for ITV1 was £1.22 million, down from £1.28 million the year before.

The broadcaster said its total channels family viewing share nudged up 0.1 per cent to 23.2 per cent last year, but the share for ITV1 - home to shows such as Dancing On Ice, X Factor and Wild At Heart - fell 2.1 per cent. This drop was better than double-digit declines for rival commercial terrestrial channels Channel 4 and five, it added.

Mr Grade, who joined the broadcaster at the end of 2006, said: "The first priority for ITV was to stem the decline.

"We did more than that, delivering an increase in viewing to the ITV family for the first time in over a decade.

"For the first time in many years, ITV1 outperformed its competitors and we've continued to do so into 2008."

He said that so far this year advertising revenues were up 2 per cent for the first quarter this year, "well ahead of the market".

"We are heartened by the positive response of advertisers to the improved on-screen performance and our investment in channels and online," he added.

ITV has seen its shares come under significant pressure over the past year, hitting all-time record lows in January and February as a difficult advertising market takes its toll.

The shares have weakened to such an extent that rumours have resurfaced about takeover interest from private equity firms Apax, Kohlberg Kravis Roberts and Provident.

Mr Grade, who promised a content-led overhaul for the broadcaster when he took over, said he was confident about the prospects for this year, citing the England football team's home games and the return of News At Ten to ITV1.

"I am confident that the business is in better shape going into 2008," he said.

ITV said revenues suffered a £58 million hit from premium rate services (PRS), which includes income from phone-ins and on-screen competitions.

Last year the broadcaster revealed a spate of phone-in problems affecting programmes such as Ant and Dec programmes Saturday Night Takeaway and Gameshow Marathon and Soapstar Superstar. Talent show X Factor also saw millions of phone-in votes not counted.

Mr Grade suspended all SMS text and red button voting during live ITV shows at one point while the incidents were investigated.

He said: "Such incidents for the most part appeared to stem from misguided editorial judgments taken with a view to maximising viewer enjoyment, not from any desire to maximise PRS revenues.

"Nonetheless, we let our viewers down and that is inexcusable. We are determined to restore public trust in ITV and UK broadcasting as a whole."

He added that the phone-in scandals had been taken into account when deciding bonuses for the executive team.

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