Sorrell warns ITV against cutting programming spend

LONDON - Sir Martin Sorrell has warned ITV against reducing its £1bn programming budget, despite the pressure the commercial broadcaster is under from falling advertising revenues, according to a report.

The Times has reported that the chief executive of WPP told a gathering of 100 ITV executives at the broadcaster's Gray's Inn Road headquarters that cutting programming spend would scare off big advertisers.

Sorrell said: "It's critical, absolutely critical. Our clients are looking for mass audiences, high shares, interest in the content, engagement in content and the programming.

"It is going to remain tough and I think you have to batten down the hatches, obviously, on the cost side, but you've got to remember that you're not going to cut your way to growth."

ITV executives may have found Sorrell's comments a bitter pill to swallow, given the broadcaster's on-going battle against the contract rights renewal (CRR) mechanism, which it would argue Sorrell's media agencies benefit from.

The controversial TV airtime trading mechanism prevents ITV from raising advertising rates to compensate for lost audience, and is claimed to have cost the company about £300m.

There has been concern that the combination of CRR and a downturn in ad revenues will lead ITV to rethink its programming budget.

However, some of Sorrell's comments at the gathering about public service broadcasters and Google will have gone down better with ITV executives.

Sorrell ignored the CRR issue but said there was a need for public service broadcasting reform and also highlighted Google's freedom to operate in the UK, unhindered by regulation.

Google is effectively the biggest media owner in the UK and is unregulated, Sorrell said.

These comments will be welcomed by Michael Grade, the executive chairman of ITV, who regularly mentions Google's freedom when campaigning to overhaul CRR and other regulatory burdens.

Separately, ITV is almost certain to be relegated from the FTSE 100 index of Britain's biggest public companies when the result of the FTSE quarterly review is released tonight.

The commercial broadcaster joined the blue-chip index in 2004 when it was formed from the merger of Granada and Carlton.