ITV slashes jobs and top dramas

Boss Michael Grade effectively admitted that his vision to take ITV more upmarket had failed and that "feelgood" entertainment will dominate its schedules in future.

He said programme budgets will be slashed by £135million over the next two years after the company announced a £2.7billion loss for last year. It follows a massive downturn in advertising because of the recession and increased competition, especially from the internet.

The cutbacks are in stark contrast to Mr Grade's promise in September 2007 to give ITV "a major facelift" with fewer repeats and more long-running drama series.

The cuts are affecting even stalwarts such as The Bill, which has been moved from its 8pm slot to 9pm and is losing one episode a week.

ITV also revealed plans to sell its networking website Friends Reunited, which has suffered falling revenues because of competition from free rivals such as Facebook and Bebo. It is also selling online directory Scoot.

There will be 600 ITV job losses, of which 450 would be in London, and the rest at regional bases such as Leeds.

Gerry Morrissey, general secretary of the broadcasting workers' union Bectu, said he was "outraged" at the scale of the job cuts. "We will do everything we can to protect our members and we will protest to Ofcom about ITV's claim to be investing more in programmes when they are cutting back," he said. "Michael Grade has abrogated his responsibility to ITV's staff. We desperately need a new management model."

Bectu said it believed one-off drama programmes planned from this autumn would now be shelved.

Media experts said ITV faced huge challenges responding to the massive shifts in media spending in the online age.

Martin McNulty of online marketing agency Trafficbroker, said: "The shrink in ad revenues at ITV isn't simply the result of a global deterioration in the economy, but reflects a fundamental change in the mindset of advertisers.

"ITV's biggest competitor, these days, is Google and that's a major cause for concern."

ITV's accounts reveal that the board was paid a total of almost £2.9million last year including £100,000 for former HBOS chief and government City adviser Sir James Crosby, who worked for around 20 days as a non-executive director.

However, executive director pay was frozen and there were no bonuses. Mr Grade, who was paid £934,000 last year did not get a bonus.

He said today the focus in future would be on proven audience pleasers such as Britain's Got Talent, Coronation Street, I'm a Celebrity and X-Factor and Champions League football.

Chief operating officer John Cresswell said: "While there have been some successes, including The Fixer, Wired and Place Of Execution, midweek drama at 9pm did not perform as consistently as had been hoped during 2008." Mr Grade also confirmed that long-standing dramas Heartbeat and The Royal will not be recommissioned but insisted that ITV was not giving up on drama altogether.

He said: "We will be winding down our stock position. Basically we already have two years of Heartbeat and Royal on the shelves so there is no point in making any more at the moment. We currently produce eight hours a week of original drama and that will come down to seven. This will not damage our ability to steam ahead when conditions turn around."