Phone scandals hit ITV profits

ITV's financial performance has taken a major blow from phone-in scandals and their knock-on effect on revenues generated by premium rate services.

Its pre-tax profits for 2007 were £188m, £100m less than the previous year, while revenue was £2.08bn, down 5% on £2.18bn in 2006.

The company said revenues from premium rate services were down £58m. Phone-in gaming channel ITV Play and its associated late-night strand on ITV1 were closed during 2007.

Other phone-ins were suspended or suffered from lack of viewer confidence after a string of revelations about them being run improperly.

Revenues at ITV's content division also dipped by £37m. The broadcaster said this was because "sufficient and consistent commissions were not secured from ITV and other UK channels".

Selling more content is an important plank of executive chairman Michael Grade's plan to get ITV back on track, and the company said it hopes performance will improve through acquisitions and deals with other producers.

Despite the knocks, Grade and ITV were upbeat as they released the 2007 results today.

The company said advertising revenue had been stabilised and viewing across its channels increased year-on-year for the first time since the early 1990s, largely because of the digital channels' share.

Grade said his turnaround plan was still on track: "We have made real progress towards delivering on our 3-5 year growth strategy."

He added: "The transition to digital marks the start of a new era for ITV. For 25 years, ITV1 lost share to new services, for example Channel 4, Five and Sky. The UKís leading commercial channel appeared locked into an inexorable cycle of decline, exacerbated by poor performance.

"By the end of 2007, over 85% of UK homes had converted to digital. The multichannel fragmentation effect began to ease and ITVís performance improved."