ITV wants public service condition to be dropped

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ITV has called for the lifting of its entire remaining public service broadcasting (PSB) obligations, which cost it £250m a year, as soon as possible.

The commercial broadcaster said regulations forced it to show specific religious, children's and regional programmes while its key competitors laboured under no such requirement. The company calculated that making these programmes cost £180m a year, while the "opportunity cost" of not showing potentially more popular programmes added a further £70m to its burden.

Reporting 2005 financial results yesterday, Charles Allen, ITV's chief executive, suggested ITV should be compensated if it is forced to continue to show PSB programming. He said in the past, PSB obligations were "payment in kind" for ITV's use of the valuable analogue television spectrum to broadcast.

"This [issue] needs to be addressed in the next couple of years. The model does not work in the digital age.... I'm happy to provide this programming. But we don't have a model for it any more," Mr Allen said.

The Government recently announced 70 per cent of UK households have access to digital television, offering many more channels than the five on analogue. ITV said the costs of making programmes such as regional news were "disproportionate" to the ratings achieved. Regulators are to review ITV's PSB obligations but that does not have to occur until 2012. ITV said it wanted a much swifter "debate" to resolve the issue. Last year, the media regulator Ofcom halved ITV's obligations to broadcast non-news regional programmes to one-and-a-half hours a week.

Separately, ITV has said it wants the contract rights renewal regulatory (CRR) mechanism to be listed. This is a scheme to ensure that falls in ITV viewing figures are reflected in the amount of money advertisers paid for slots. Mr Allen said yesterday the company had not yet applied for a review of CRR but "it is on our agenda for 2006".

ITV reported that pre-tax profits, before amortisation and exceptionals, grew £135m to £460m for 2005. The company's competitors pointed out that the uplift appeared to come entirely from another regulatory source - ITV cut its licence payments to the Treasury last year by £132m.

The company also announced a £300m sharebuy-back. Advertising revenues at the core ITV1 fell by £50m last year after the channel lost viewers, but this was more than offset by a £144m gain in ad revenues from its newer digital channels, ITV2, ITV3 and ITV4. The company said half its ad revenues would come from outside ITV1 by 2010, from 33 per cent at the moment. ITV warned ad revenues in the first quarter of 2006 were 10 per cent below last year.

PSB obligations

* National/international news 365 hrs/year

* Current affairs 78/yr

* Religious programmes 52/yr

* Regional news 5/week

* Regional non-news 1.5/wk

* Children's 8/wk