Grade targets ITV revenue growth from content and online

LONDON - ITV1's programming budget will be frozen under plans to be revealed by ITV executive chairman Michael Grade today, which will task ITV's production and online arms with achieving growth and gives cash to digital channel ITV2.

As part of the new strategy, to be revealed by Grade, ITV2's programming budget will be increased by £20m and the axe is to fall on ITV Play's phone-in programming after call volumes fell to "uneconomic levels".

It had been thought that there would be more cash for ITV1, with reports of around £50m being earmarked for the flagship channel.

However, the main channel will have to do without extra programming investment, but will aim to win a greater share of advertising budgets through an increase in ad-funded content.

In addition, it will revamp its 9pm-10pm weekday slot to increase its share of light viewers and ABC1 adults.

Grade set a range of targets for each area of ITV's business, which he hopes will give the company 3%-5% compound annual revenue growth over the next three years.

ITV's channel portfolio will aim for at least a 38.5% share of commercial impacts in 2012. In 2005, ITV's share of commercial impacts was 44.6% and in 2006 it was 42.2%, mainly because of the decline of ITV1.

No advertising revenue target was announced, but the latest figures show the recent decline in ITV1's commercial fortunes has slowed still more since the start of the year. It is now down 3.4% over last year, compared with the 10.5% drop between 2005 and 2006.

ITV1 is set for a 2% rise in ad revenues in the third quarter, and ITV as a whole is on course for 5%, but the total TV market will be up by 6.5%.

The content production side of the company has the biggest task, of doubling revenues to around £1.2bn by 2012. Grade wants ITV Productions to increase its share of ITV1's commissioned spend from the current 54% to as close to the maximum 75% as possible.

The global content division, led by Dawn Airey, will have £200m to spend on acquiring production companies, paid for out of non-core asset disposals. Grade also hinted at "new commercial structures that allow programme-makers to retain a share in the commercial upside of their programmes".

The consumer business will take its online revenues to £150m by 2010, from a total of £47m in 2006. At least 75% of revenues will come from advertising and the balance from subscription and transactional services.

Grade's speech is aimed to please ITV's investors, referring to "self-help" and "self-funding", and promising the company will achieve growth by keeping tight control of costs and will not cut its dividend.

Grade said: "By 2012, I want ITV to be widely acknowledged as the UK's favourite source of free, original entertainment across all popular platforms and devices, not just on television.

"Reshaped, revitalised and redeployed, ITV's unrivalled assets will ensure that it is once again a top and bottom line growth business.

"The old ITV competed in a £6bn market, the UK television advertising and programme market. The new ITV will be operating in a market worth double that, including new types of advertising, new and diverse revenue streams, all driven by our premium, mass appeal content, free to the consumer and valued by our advertisers."