Grade wields axe as ITV slumps to record £1.5bn loss

Britain's biggest commercial broadcaster fell spectacularly into the red in the first half of the year after a £1.6 billion write-off.

The loss, which triggered a nine per cent slump in the share price, comes in one of the most traumatic periods in the history of the 53-year-old company which is behind Coronat ion Street, Emmerdale and The Bill.

Executive chairman Michael Grade said advertising revenues booked for next month were 20 per cent down on 2007, with no sign of recovery later in the year. In the first two thirds of the year they had been holding firm.

He said: "We had a very steady eight months up to the end of August where we outperformed the whole TV market. But looking into September the numbers are way down on a year ago. We did, of course, have the massive boost from the Rugby World Cup in September 2007."

He said the advertising market as a whole could be down by as much as eight per cent in the last quarter of the year.

It is one of the clearest signs of the impact the economic downturn is having on Britain's biggest companies. Budgets for advertising are among the first to suffer in tough conditions.

The company said it was trying to save money by cutting £35 million from its costs over the next two years and by halving the dividend it pays to the City.

The industry fears that ITV will cut up to 600 jobs, 10 per cent of its workforce, with the axe falling mainly on production and advertising-staff. But the former BBC chairman insisted that the cuts would jeopardise planned improvements in programming.

He said: "Slashing our investment in programming would represent a false economy, with any short-term earnings gain outweighed by the inevitable drop in our share of commercial impacts in the short-term and damage to the growth prospects of the whole business over the longer term."

However, critics in the City and the TV industry said ITV still had a long way to go to upgrade the quality of its programmes.

David Buik of City bookmakers BGC Partners, said: "The fact remains is that ITV does not seem to have improved its programme schedule. Perhaps this is an unfair indictment but the change is taking too long.

"The flagship ITN News At Ten programme does not seem to have captured the imagination of viewers if the ratings are anything to go by."

David Wood, acting deputy editor of Broadcast magazine, said: "Grade has taken some risks, some brave creative steps, which is what the ITV schedule needed because it was looking old and tired. The trouble is you don't see overnight results and you are bound to have some failures."

ITV said it had a number of big successes in the first half of the year including dramas The Fixer and Moving Wallpaper.

It also showed the top rating sports event of the first half of the year - the all English Champions League Final in June, which attracted 10 million viewers. However, it admitted that there had been some major ratings duds, including the crime drama Honest and the royal family spoof The Palace.

The loss was caused by a huge write down of the value of TV companies bought in 2000 and 2004.

It is an admission that the companies bought to create ITV - Anglia, Meridian, HTV, Carlton and Granada - are worth much less than previously estimated.

It comes three months after ITV was fined a record £5.68 million by watchdog Ofcom over use of premium rate phone lines.

An investigation into the 2005 British Comedy Awards, broadcast on ITV, also found that presenters Ant and Dec had been wrongly awarded a prize that should have gone to comedy actress Catherine Tate. They later returned the prize.

The company said its underlying profit was down 20 per cent at £121 million.