ITV's regional news faces cuts

WHEN Michael Grade first arrived to start work at ITV's headquarters in January last year, following the shock of his defection from the BBC, he was greeted by a spontaneous round of applause from staff. Following yesterday's ITV strategy update, applause from staff may be more muted.

Grade said that job cuts will be a partial price for his aim of improving ITV1's programmes without spending more than the existing 1 billion a year. The red laser dot is now sitting on ITV's regional news and current affairs output - most recognisable to viewers in the form of the 6pm regional news show - which costs the broadcaster th emajority of the 120 million a year it commits to regional programming.

Grade raised the prospect of job cuts after stating ITV's recovery plan would be "self-funded" - meaning money for new programmes will have to be found internally. "Inevitably, I'm sure there will be have to be some redundancies, but at this stage I'm not sure it is helpful to start throwing numbers around," Grade said.

Regional news is one area which will be heavily affected. Grade insisted ITV was committed to regional current affairs, but argued the 120m spend was "out of proportion" to its commercial value and public benefit. In a presentation to analysts, ITV revealed it is proposing a restructuring of regional news to Ofcom that it calculates will save up to 40m a year. That plan, which would have to be approved by the regulator, involves consolidating the 17 different regional news bulletins broadcast at 6pm each night to nine "well-resourced" services.

That rang alarm bells with the National Union of Journalists. Paul McLaughlin, the national broadcasting organiser of the NUJ, says: "Plans announced today would drastically reduce local news in the UK. This is a vital service for viewers."

It is ominous news for Border, which serves Dumfries and Galloway, Cumbria and the Isle of Man. One option thought to be under consideration is for Border's Scots audience to be hived off to STV with English viewers sent to Tyne Tees.

David Mundell, shadow secretary of state for Scotland and MP for Dumfriesshire, Clydesdale and Tweeddale, says: "Not only will this wipe out Border TV, but it will also wipe Dumfries and Galloway and the Borders off the television news map. ITV's plan to merge its smaller companies such as Border TV is appalling and unacceptable for the area. This is a clear disregard for the viewer and it is clearly driven by cost-cutting."

There was no news and current affairs implication for STV, which is owned separately to the majority of the ITV network. Away from news, how exactly does ITV's "self-funding" recovery work? Grade's vision sees two sources of revenue. One is from content, where the ITV executive chairman has set a target of a doubling of revenues to 1.2 billion by 2012. He wants ITV's in-house programme-making division to achieve this through higher sales and acquisitions. This task falls to ex-BSkyB head of networks Dawn Airey, who joins ITV next month as director of global content. Airey will have a war-chest of 200 million available to buy production businesses as part of the plan.

ITV's internet division, including its portal ITV.com, will also feel the pressure to perform, as Grade wants to increase online advertising revenues to 150 million by 2010. Grade cited as an example of what was possible a video clip which appeared on YouTube showing the winner of one of its most popular talent shows. "30 million hits on YouTube for Paul Potts winning Britain's Got Talent. We will be able to monetise that in future," he declared. Friends Reunited, the website which cost ITV 170 million in December 2005, also plays a major part in the new media plan. Grade said there were plans underway to make parts of Friends Reunited free and vowed ITV would now "build a bridge" between the website and its other businesses.

One notable winner in yesterday's strategy update were ITV's portfolio of digital channels. They get an extra 20m, and ITV2 is tasked with overtaking rival Five in the commercial network market for 16 to 34-year-olds.

Net advertising revenue for ITV1 grew 2 per cent in the third quarter as the channel attracted big audiences with The X Factor. It is also hopeful of reaping the dividend of broadcasting the Rugby World Cup and the climax to the Formula One season.

While the numbers sound hopeful, reaction in the City was cool. Analysts say the company turnaround was already factored into the group's share price, and shares fell by 1.7p, to 111p.