The premium-rate phone-in scandal is damaging revenues at ITV, the broadcaster told shareholders yesterday.

In a trading statement, ITV said that confidence had fallen after the uproar about fraudulent phone-in competitions, including some on GMTV. Revenues from premium rate telephone calls have fallen 20 per cent over the past two months, which, the company said, will have a “material impact” on revenue for 2007.

The warning came as Michael Grade addressed shareholders at his first annual meeting since he was appointed chairman in January. He promised a new schedule for terrestrial and digital channels. Pointing to changes he has already made since his appointment, he said that he was committed to “innovative and bold” programming that would bring back viewers who were “bored and tired” with old formats.

But his comments came as the group gave warning of a slide in advertising at ITV1, the group’s terrestrial television channel, of 9.6 per cent this year. Group advertising revenue is down 5.7 per cent. Group television advertising was flat compared with the same period last year. Analysts said that the fall in advertising was in line with expectations, one commenting on a “volatile and confusing market”.

At ITV1, adult audience figures, measured by the impact of commercials, dwindled 6.2 per cent – the same measure across all channels was down 3.8 per cent.

However, ITV attributed this to Contract Rights Renewal (CRR), a scheme introduced by the Competition Commission that reduces the amount advertisers pay ITV if audience figures fall.

Mr Grade used the meeting as a platform to launch an attack on CRR, introduced in 2003 to address concern that the merger of Carlton and Granada would lead to market dominance for ITV.

He said: “CRR is damaging UK commercial television as a whole. Selling airtime as a commodity can only lead to commodity programming and that is not in anyone’s best interests, including the advertisers.”

ITV has secured rights to the FA Cup and England football matches from 2008 and agreed long-term deals with Ant & Dec, the prime-time presenters, and Simon Cowell. It recently acquired Jaffe/Braunstein Entertainment LLC, a Los Angeles-based production company specialising in TV films and mini-series, for £2.1 million.

The chairman did not comment further on future appointments, although it is understood that he has been in talks with Dawn Airey, former head at Channel Five.

Ms Airey is in talks with potential employers after her sudden departure from a short-lived post as chief executive of start-up production company Iostar.

Blaming poor results on previous management, shareholders voted overwhelmingly in favour of Mr Grade’s appointment and for his pay packet of £825,000, plus a 150 per cent bonus. The vote came despite moves by the shareholder organisation Pirc to urge investors to reject the package on the grounds that pay deals were “excessive” and targets set were not challenging enough.

One shareholder said: “I welcome you, although there may be others who have a different view. I have no quarrels with your contract and I hope you get your remuneration as soon as possible.”

For Mr Grade to benefit fully from his bonus scheme he must lift the company’s share price to 225p and increase revenues by 5 per cent. The shares closed down 0.7p at 119.3p.

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