chickens come home to roost as ITV goes down the tube

[mike99]

ITV to cut 600 jobs as losses swell to £2.7bn

ITV to cut 600 jobs as losses swell to £2.7bn
Ian King, Deputy Business Editor

ITV this morning wrote some £2.7 billion from the value of its assets, pushing the commercial broadcaster into the red, and announced an aggressive cost-saving plan which will see it cut 600 jobs.

The company also suspended dividend payments to shareholders as part of the drive to save money which will also see ITV cut back heavily on its planned investment in programming.

It will spend £65 million less this year than it did in 2008 and freeze the programming budget for 2010. A further reduction of £70 million is planned for 2011.

The broadcaster also confirmed plans to sell Friends Reunited, the social networking website, for which it paid £175 million three years ago.
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And it warned that, during the first three months of 2009, it expects net advertising revenues to be down some 17 per cent on the same period last year.

It said that, for April, it expected to outperform the total market, which is expected to be down some 20 per cent.

Michael Grade, ITV’s executive chairman, said: “Current conditions in the advertising market are the most challenging I have experienced in over 30 years in UK broadcasting. This is reflected both in our financial results for 2008 and the tough actions we are announcing today.”

He said the decision on the dividend had not been taken lightly but represented “the prudent course in present conditions”.

Mr Grade said ITV would write-off £2.638 billion related to its broadcasting and online businesses and to breakfast TV broadcaster, GMTV.

Of these, some £2.309 billion related to the broadcasting business and a further £21 million to GMTV, reflecting the short-term downturn in the outlook for the TV advertising market.

A further impairment charge of £308 million has been taken on ITV’s online business.

The write-downs meant that ITV has reported a full year pre-tax loss of £2.732 billion — compared with pre-tax profits last year of £188 million. On an underlying basis, profits fell from £281 million to £167 million.

Mr Grade said cost savings were expected to be £155 million this year, rising to £175 million next year and £245 million in 2011.

Of course much of this is due to increased competition from other channels and the internet - compounded by the recession; but just imagine how much healthier ITV's bank balance would look today if Tessa Jowell's friend Charles Allen had exercised a bit of due diligence when he was in charge and ICSTIS/PhonepayPlus had actually regulated.

And therein lies the tragedy of the whole thing. Some of the scams (eg bogus competitions) relied on an element of dishonesty to make a good profit. Other sorts of "scam" (eg bogus votes) would have made just as much money if they had been conducted honestly. But the people involved had got so used to dishonest behaviour that it was in their blood and they had to be dishonest even when it did not benefit them in any way.

Opinion:

I personally would never bother to vote in a reality TV shown or take part in a TV competition - even an honestly run TV competition. I also think that the lives of the TV watching public would also be enhanced if this sort of drivel were removed from our screens. But I can't honestly say that I am in favour of laws banning this sort of thing.

There is still scope for companies like ITV to make shed loads of money "legitimately" from this rubbish, but not only do viewers need to trust the PRS lines, that trust needs to be well founded (a point that seems to escape PP+) in order to avoid this blowing up in everyone's faces again further down the line. And even though we can assume that any PRS services on ITV at the moment are being closely scrutinized, the problem is that we can have no confidence whatsoever that the lists of numbers harvested by the honestly run schemes currently on the box will not end up in the hands of crooks later on.

In summary PP+'s abject failure to regulate PRS over many years is not just having consequences for a few niche areas, it is having catastrophic effects in the mainstream of economic life.