Forget the profits slump – ITV is on a roll, says Grade

A year after Michael Grade walked through the revolving door at ITV headquarters, he attempted to convince the City yesterday that the commercial broadcaster's woes were at an end. Yet despite his positive spin, the news from the chief executive was not great – ITV's pre-tax profits plunged by 35 per cent last year, from £288m to £188m.

The poor results stemmed in part from a £58m loss incurred in the premium-rate telephone line scandal, which saw ITV suspend phone-in votes and quizzes after viewers were charged £7.8m for calls, despite them having little or no chance of influencing the outcomes of votes or winning prizes.

Mr Grade, however, was in a buoyant mood as he presented ITV's results at a press conference yesterday. He had prepared the ground last week by replacing ITV's director of television Simon Shaps with the former BBC1 controller Peter Fincham, who starts next month. The management team has been further boosted with the appointment of BSkyB's former boss Dawn Airey as director of global content.

Nevertheless, Mr Grade was forced to defend ITV1's new schedule after recent additions such as The Palace and Moving Wallpaper failed to deliver high ratings. The relaunched News At Ten has also consistently trailed BBC1's 10 O'Clock News. He said his flagship channel's programmes should be judged over the whole year, adding: "To sit here and pick one time period on one night and characterise the performance of the schedule on the basis of the delivery of one or two shows is not the game we're in at all."

Although the viewing share for ITV1 alone fell by 2.1 per cent last year, Mr Grade said ITV's total audience share – when measured across all its channels including digital services such as ITV2 – rose last year for the first time since the early 1990s and was up again at the start of 2008. However, the figures are somewhat disingenuous given that digital television did not exist in the mid-1990s.

"As we have seen in the full numbers, we are enjoying our best start to a year that anyone can remember – but not all shows have worked," Mr Grade said.

Advertising revenues remained stable last year, he reported, with ITV1 and ITV Digital outperforming their commercial rivals Channel 4 and Five. Describing 2007 as a "watershed year", Mr Grade added: "With a much improved performance on-screen, we have countered the myth that ITV is a business managing decline."

He singled out Coronation Street, I'm A Celebrity... Get Me Out Of Here!, Britain's Got Talent, Kingdom and Primeval as ratings winners but admitted that ITV's in-house programme-making division, ITV Productions, had to win more commissions. Its shows currently account for about 50 per cent of the ITV schedule, but Mr Grade said he was keen to see this increase to 75 per cent.

He insisted the broadcaster was well on the way towards its target of between 3 and 5 per cent annual growth until 2010 and then 5 per cent growth until 2012. It would achieve this, he said, by screening ratings-winning shows and earning £150m a year from its online operation by 2010.

"Our vision is for ITV to be the UK's favourite source of free entertainment," Mr Grade said.

Anthony de Larrinaga, a media analyst at SG Securities, said of Mr Grade's presentation to the stock market: "The strategy is there. It makes a lot of sense. The question is their ability to execute it, develop high quality production and exploit it across the channels."