The Fading Fortunes of ITV

The Commercial broadcaster ITV, once the television channel that dominated the nation, has seen its annual profits for 2007 fall by 35% to £188m after a ‘difficult year’.

The broadcaster has also seen its shares take a dive over the past year, hitting new lows in January and February. ITV has two main problems on its plate: a row about ownership, as rival broadcasters fight over what is left (BSkyB have a 17.9% stake in the firm) and advertising worries.

Much has been written about both the current pressure on advertising budgets (see Will advertising spending fall if the economy falters?). There is a long term drift away from mass market, broadcast advertising in favour of targeted promotions aimed at smaller niches using media like magazines and especially the internet.

ITV has managed to pick up some viewers: the share of the “ITV family” of channels increased to 23.2% from 23.1% in 2006. This is good news, though it follows many years of decline and a drift away from television in general.

The row over ownership is more complicated: in January, the government ruled that BSkyB must reduce its holding in ITV from the current level of 17.9% to below 7.5% and not take a seat on the ITV board. They are worried about any one company having too much media dominance. BSkyB had spent £940m buying 17.9% of ITV, but ITV’s share price has dropped since then.

That deal effectively prevented cable operator NTL - which has since been renamed Virgin Media - from launching a takeover bid for ITV, leading to cries of protest from Virgin boss Sir Richard Branson, consumer groups and the regulator Ofcom.