ITV has revealed plans to team up with the BBC to launch a free satellite service next year - in a broadside against BSkyB.
The move was unveiled as the company yesterday posted a 60 per cent rise in first-half profits to £205 million, despite falling advertising revenues at its flagship ITV1 channel.
The free satellite service from the BBC and ITV, due to launch in the first half of next year, is intended to compliment Freeview, the growing terrestrial service which is in more than five million homes but is not available across all of Britain.
ITV and the other main UK channels have a higher share of viewers on Freeview than on BSkyB's satellite service or on cable TV, since there are fewer channels to choose from.
As Britain prepares to shut off its analogue TV signal by 2012, ITV is trying to keep as many viewers as possible watching free TV.
Chief executive Charles Allen said: " Freeview continues to be the digital platform on which ITV performs best.
"It is therefore a strategic objective for us to support the growth of Freeview."
As part of the satellite launch, ITV plans to broadcast its channels "in the clear" without encryption, so that viewers will not need to have a special access card.
The encryption service is currently provided by BSkyB, and renewal talks between the companies have not gone smoothly, including a complaint by ITV to media regulator Ofcom.
Sky has a free satellite service of its own, but it has received little publicity as Sky tries to increase the number of subscribers to its subscription service.
ITV has suffered a tough summer in which its flagship ITV1 channel lost viewers to rival Channel 4, which had hits such as Big Brother and Lost.
ITV1 ad revenues were down 3.4 per cent in the first half, and overall ad revenues were roughly flat excluding acquisitions.
Including the company's newly consolidated stake in GMTV, ad revenues were up 3.5 per cent.
The company, home to shows such as Coronation Street a n d I'm a Celebrity...Get Me Out of Here, said its pre-tax profit before goodwill amortisation and other items for the six months to June 30 was £205 million. The half-year results, which include a £9 million gain from the sale of property, were 60 per cent higher than the year-ago figure, due mostly to the reduction in licence fees that the company pays to the Government.
The figures were "well ahead" of consensus, the Numis media team said in a research note.
ITV said its advertising market was improving in the third quarter, and it expects total advertising spending to increase by 4.3 per cent, including new revenues from its GMTV acquisition and boosted by fresh episodes of I'm a Celebrity and X Factor.
Excluding GMTV, thirdquarter ad revenues are expected to edge 0.7 per cent higher.
The company also announced that it would make a £325 million lump-sum payment into its pension fund to partly fill a funding gap.
Its interim dividend increased by 20 per cent to 1.32 pence per share.