'Lack of innovation' highlighted as ITV profits fall

New ITV boss Michael Grade highlighted a "lack of innovation" in programming today after the broadcaster announced a sharp fall in annual profits.

Two months into his role as executive chairman, Mr Grade said he had developed more positive impressions than negative ones about ITV, adding that most of the problems were within the control of the company to remedy.

In annual results published today, ITV said net advertising revenues fell 8% during the year to £1.49 billion, with the figure for flagship channel ITV1 £181 million lower at £1.28 billion. Strong growth from the broadcaster's digital channels helped offset some of the weakness at ITV1.

Underlying earnings for the year were down to £375 million from £460 million, with bottom-line pre-tax profits off by £23 million at £288 million.

Mr Grade said he wanted the programming side of the business to raise its creative ambition and become more adventurous.

He added: "We must be more innovative and take more risks. We must be more relevant and we must be ahead of audience tastes. In particular we must regain our pre-eminence in drama series on ITV1 at 9pm."

Mr Grade believed the current lack of innovation partly reflected a fear of ratings failure, brought about by a regulatory framework that closely ties in advertising charges with audience figures.

He added that the company had developed a tendency towards bureaucracy and was playing catch-up in many areas, mainly because of the efforts required to bed in the merger of Carlton and Granada.

Mr Grade said his immediate priorities were to develop the strength of programming and new media businesses, as well as work to reduce the "overly onerous" regulatory constraints.

The broadcaster announced earlier this week that it had suspended all premium-rate interactive services while it carried out an independent review.

The move, which is expected to take a matter of days, follows news that ITV overcharged X Factor viewers to the tune of £200,000 in an interactive vote blunder. The error - affecting 1.3 million votes - occurred during every live show in the last series.

Mr Grade said he was confident that ITV's systems were compliant, but that it was important viewers were able to trust the services.

He said: "There have been mistakes across a number of broadcasters which leads to questions in the public's minds. The question of trust is paramount to us."