LONDON — Yes, Granada Film is closing down. All 10 staff have been given their notices. And, yes, Pippa Cross and Janette Day, the two execs who have run the movie arm of ITV broadcaster Granada for many years, are ankling to form their own production and sales company.

Yet Granada initially described these changes as “cosmetic,” claiming to be as committed to film production as ever. The official line is that filmmaking is merely being “subsumed” into Granada Content, the giant TV production division under the direction of comedy and drama controller Andy Harries.

“There’s no change in budget, and Granada will still be making films like ‘Bloody Sunday,’ ” a spokesman said.

Sorry, it won’t wash. As insiders admit, the truth is that, while Granada is not pulling out of film entirely, it has drastically scaled back its ambitions. Sure, Harries is a talented (and talent-friendly) creative exec. He even directed a movie once — “Lenny Live and Unleashed” back in 1989 — and has always hankered to produce films. But he’s a busy man with a vast empire to run, at a time when Granada is squeezing the life out of its drama budgets.

He knows, from his experience as exec producer of Granada Film’s misbegotten 1998 movie “The Misadventures of Margaret,” just how tough it is to drag a movie successfully onto the bigscreen. That’s a reality about which the rest of the Granada hierarchy is largely ignorant. It’s light years away from the cozy, quick-fire world of TV commissioning.

Without a separate film unit dedicated to the complex and time-consuming task of developing movie projects and piecing together the 3-D jigsaw of international co-finance, Granada cannot expect to be more than a bit player in movies, no matter what lip service the company pays to the idea.

The spin coming out of Granada is that Harries will refocus on developing populist, low-budget projects for British audiences, drawing on local TV talent. In fact, he has had a budget from Granada Film to do exactly that for several years, but nothing has yet resulted. With his new mandate, however, he is likely to pursue this more energetically. He has already tapped Christine Langan, original producer of the hit series “Cold Feet,” to lend a hand, and ultimately (though not immediately) hopes to rebuild a small team dedicated exclusively to film.

Granada points to a $1.5 million movie in the works with Ant ‘n’ Dec, the fresh-faced comedy duo who graduated from kidshows to primetime. That’s a project that Cross has personally nurtured with the Granada children’s department, and there’s no script yet.

The shriveling of Granada’s film ambitions has more do with the financial pressure upon the ITV web than with any particular problems at the movie arm. But that’s no consolation for the British film community, which feels increasingly like it’s coming apart at the seams. The recent litany of bad news includes the shutdown of FilmFour, the financing wobble at Signpost Films, the termination of Intermedia’s U.K. office and the cutback of Universal’s London acquisitions team.

The closure of Granada Film also removes an ally for the U.S. indie sector, where Granada has long been active both as a producer and a co-financier, most recently with the acclaimed “Ghost World.”

Granada will honor its commitment to produce and co-finance Mira Nair’s “Vanity Fair” with Focus Features and Craig Ferguson’s Scottish romantic comedy “All American Man.” Cross and Day are negotiating to take some of the remaining projects to their new shingle. Sales exec Penny Wolf may also join them.

BBC pics bookend London fest

Two British pics — both, incidentally, backed by BBC Films, the only U.K. broadcaster not cutting back its commitment to the movie business — will bookend this year’s London Film Festival. The opener Nov. 6 will be “Dirty Pretty Things,” directed by Stephen Frears and majority-financed by Miramax, which won rave reviews at the Venice fest. The closing night film Nov. 21 will be Thaddeus O’Sullivan’s “The Heart of Me,” starring Helena Bonham Carter and Paul Bettany, which preemed at Toronto. The full lineup will be unveiled Sep. 18.

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