ITV is cutting 600 jobs, ditching expensive dramas such as A Touch of Frost and selling the Friends Reunited website in a bid to weather "the worst advertising slump in 30 years".
The commercial broadcaster yesterday announced a loss of £2.7 billion in 2008 after a huge write-down in the value of the company's assets and, according to Rupert Howell, ITV's commercial director, is now "scrapping for its life".
Watch highlights from ITV's 54-year history When first launched in 1955 the broadcaster was described as a "licence to print money", but advertising revenue has dropped 17 per cent in the past year and is expected to decline further as advertisers move their advertising spend online.
ITV is cutting 600 jobs with 192 jobs lost at ITV Yorkshire which produce dramas such as Heartbeat and The Royal. The remainder of job cuts will be in London and across all departments.
The channel's £1 billion programme budget has been cut by £65 million this year and a further £70 million in 2011 which has resulted in the demise of popular dramas such as Wire in the Blood and A Touch of Frost. Among the causalities is a new adaptation of A Passage to India, which has now been scrapped.
Viewers will instead see more light entertainment programmes which are cheaper to produce. However stars such as Ant and Dec and Simon Cowell have been warned that their "golden handcuff" deals may be reduced to silver in the summer. ITV is also said to be keen to renegotiate the £425 million deal struck with the FA over exclusive football rights.
The company plans efficiency savings of £155 million this year, rising to £175 million in 2010 and £245 million in 2011.
Michael Grade, the executive chairman said the cuts were due to the "short-term horrors" of the economic downturn, which had seen advertising deteriorate significantly from the end of last year.
He said: "The tough actions we are taking have to be seen against that backdrop. These are unprecedented and extremely difficult times. We have to be focused more on our core business."
However, Gerry Morrissey, general secretary of the broadcasting workers' union Bectu, said he was "outraged" at the scale of the job cuts.
He said: "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. Michael Grade has abrogated his responsibility to ITV's staff. We desperately need a new management model."
The confirmation of plans to sell Friends Reunited comes little more than three years after ITV bought the business for an initial £120 million from founders Steve and Julie Pankhurst, who set up the website in 2000. The business is now valued at around £40 million.
Maker of iconic programmes goes down the tubeTHERE'S no getting away from it, Britain's premier commercial broadcaster is officially in crisis, writes Steve Barrett. Yesterday's announcement of job and budget cuts was further evidence of the trouble it is in.
So what has gone wrong for once-mighty ITV that made its name through iconic programmes including Corrie and Emmerdale, but also hugely popular dramas such as Cracker, Morse and Brideshead Revisited?
There was a time when ITV was a metaphor for printing money through advertisers attracted to the chunky audiences it attracted in a three-channel TV world. But viewers can now choose between hundreds of digital channels and other distractions such as the internet and video games.
ITV is still the only commercial broadcaster able to give the BBC a run for its money in terms of mass audiences, but these days it's through formulaic fare such as Britain's Got Talent, I'm a Celebrity, The X Factor and Dancing on Ice. Two of its popular dramas, The Royal and Heartbeat, are being "rested" and the days of World in Action, This Week and Weekend World – documentaries and news programmes that also attracted millions of viewers – seem like ancient history.
ITV had already shed 1,000 jobs from its 5,500-strong workforce last autumn; it will now employ fewer than 4,000 people. And, like many other media companies, it also has a big hole in its pension fund – £178 million.
Michael Grade has applied a sticking plaster to the wound, but what is he going to do to ensure long-term survival? There has been talk of a commercial super-broadcaster being created through the merger of ITV, Channel 4 and Five, but it is unlikely that competition authorities would allow that.
Whatever Grade does, one thing's for sure: the quality of TV fare on offer for the ordinary viewer is bound to suffer.
• Steve Barrett is the editor of Media Week.
