LONDON — Struggling British terrestrial giant ITV will cut some 600 more jobs and take the ax to its program budget, as it revealed 2008 adjusted pre-tax profits had plummeted 41% to £167 million ($234 million) last year.
Calling the advertising market “the most challenging in over 30 years,” executive chairman Michael Grade unveiled a massive cost-cutting drive on Wednesday that follows a bout of bloodletting in the fall, when 1,000 of its 5,500 staffers were pinkslipped.
ITV’s $1.4 billion program budget will be cut by $92 million this year, frozen in 2010 and cut by a further $99 million in 2011.
High-end drama will be hit as ITV moves toward a more entertainment-led program mix.
The cuts effectively tear up Grade’s recovery plan targets announced shortly after he joined the web two years ago.
ITV will sell the Friends Reunited website, bought for $247 million in 2005, but now worth no more than $56 million, and close one of its flagship studios in the north of England. ITV’s profitable digital TV business SDN, which controls a bouquet of webs on the Freeview DTT platform, may also be sold.
Grade did not rule out a rights issue as ITV struggles to come to terms with the financial crisis and technological changes that have helped cablers, satcaster and IPTV programming make hefty inroads into the broadcaster’s business.
“Our priorities have to be aligned to the changed economic context,” Grade said. “The ITV board recognizes that the 2012 revenue targets set in 2007 are no longer appropriate, and we are focusing on our core business as a producer-broadcaster, on reducing our costs and cash generation.”
In 2008 ITV’s net ad revenue fell 4% year on year to $1.9 billion, outperforming the market, which fell 5%.
Global content revenues were up 10% to $878 million.
Grade, speaking on a conference call, said ITV’s business model is not broken, and he was confident that the web would thrive once the economy improved.
But many commentators argue that ITV is facing terminal decline due to its failure to cash in on production and distribution or create new revenue streams.
Speaking at a recent Royal Television Society confab, Christopher Bland, the former chairman of the BBC, telco BT and ITV subsid LWT, predicted that “the speed at which ITV’s decline is happening is rapid and will accelerate this year.”