British commercial broadcaster ITV has suspended its final dividend and is to cut 600 jobs and sell assets after reporting results hammered by the severe downturn in advertising.
ITV, which has seen it shares crash around 80 per cent in the last two years, posted a loss of £2.7 billion due to a writedown.
The home to talent show X-Factor and soap opera Coronation Street also said it was scrapping revenue targets and would slice £65 million off its programming budget after advertising revenues slumped almost 20 per cent in the first quarter.
"Current conditions in the advertising market are the most challenging I have experienced in over 30 years in UK broadcasting," said Executive Chairman Michael Grade, who described the downturn as a "short term horror".
"Visibility on future revenues is limited and trading in 2009 remains uncertain."
The group said net advertising revenue for the family of channels was down 4 per cent in 2008. It is expected to be down around 17 per cent in the first quarter of 2009 and the whole advertising market is expected to be down 20 per cent in April.
ITV channels held their viewing share.
It said its 2012 revenue targets set in 2007 were no longer appropriate and it would now focus on its core business as a producer and broadcaster, reducing costs and increasing cash generation.
It pledged to deliver annual cost savings in 2011 of £245 million against the 2008 outturn. Of this, £155 million of annual savings will be delivered in 2009, rising by £20 million to £175 million in 2010.
It is seeking to dispose of the social network Friends Reunited, will close ITV Local and is considering its options for multiplex business SDN.
Analysts had expected ITV to cut assets, jobs and the dividend and they welcomed the new strategic update. Shares in the group were down 4 per cent at 22.8 pence against an otherwise higher market.
Operating earnings before interest, tax and amortisation (EBITA) in 2008 were down 32 per cent at £211 million.
It reported a £2.7 billion
($3.81 billion) loss after an impairment charge against broadcasting and online assets. Revenues were down 3 per cent at £2.03 billion, slightly ahead of a forecasted £2.01 billion.
"The Board is recommending the suspension of the final dividend," Mr Grade said. "This is not a decision taken lightly. The Board's judgement is that it represents the prudent course in present conditions."
Analysts at Numis said the cost savings largely mitigated the underlying deterioration in trading, limiting their 2009 downgrade to around £20 million.
Reuters