The task facing ITV’s new executive chairman Michael Grade was pulled into sharper focus yesterday as the broadcaster reported falling advertising income.
The company said net advertising revenues had crashed 12.5 per cent at its flagship ITV1 channel during the last 12 months and by three per cent at breakfast station GMTV.
Interim chief executive John Cresswell admitted in a trading update that the advertising market "remains challenging".
However, ITV insisted that trading in 2006 had met current expectations and said it had actually received a boost from regional television advertising.
It also pointed out that ITV1 was still the UK’s most popular peak-time channel with a 27.3 per cent share of the adult audience compared with BBC1’s 24.5 per cent.
Advertising at the digital channels increased by 37 per cent with its #150 million revenue target for ITV2, 3 and 4 exceeded a full year ahead of schedule.
BBC chairman Mr Grade shocked the industry by taking the top job at ITV at the end of last month – a move described as a "coup" by analysts.
It came after ITV rejected a #4.7 billion takeover offer by cable operator NTL following BSkyB’s decision to take an 18 per cent stake in the broadcaster.
Mr Grade, who had previously worked on London Weekend Television, immediately pledged to "accelerate the improvement in programming performance" for viewers and advertisers.
ITV said its programme budget for 2007 would be maintained at #1 billion, including #815 million committed to ITV1 and #30 million to GMTV.
A spokesman was tight-lipped on how the broadcaster planned to use the money to revamp its schedules following a number of high-profile flops.
Saturday night show It’s Now Or Never, which invited members of the public to make a special announcement on national TV in the style of a musical, attracted only 1.7 million viewers.
This year the broadcaster brought back Celebrity Love Island despite the under-performance of the first series, which featured Abi Titmuss and Rebecca Loos.
But the second series – which dropped the word Celebrity from its title – failed to draw the viewing figures that were expected or challenge the reign of Channel 4’s Big Brother.
ITV said its production arm had enjoyed a successful year with revenues growing strongly. Sam Hart, an analyst at Charles Stanley stockbrokers, said: "ITV’s pre-close trading update was in line with weak expectations.
"Michael Grade will join in January and a complete strategy review can be expected during the first few months in the job.
"Investment in programming is likely to be at the heart of his strategy. Given his strong track record there is considerable hope he will be able to slow the decline in advertising revenues and audience share at ITV1.
"The continued fragmentation of audiences and the proliferation of digital channels, however, means he faces an immense challenge."
Analysts at Numis said the #1 billion programme investment pledge was encouraging as the 2006 figure had included the cost of covering the World Cup.
"We'd actually been expecting a modest reduction," they said in a note to investors.