Michael Grade pledged yesterday to salvage ITV by delivering between 3 per cent and 5 per cent growth in turnover for the next three years, fuelled by doubling production and a fivefold increase in the broadcaster’s online revenues.

The expansion was at the heart of a back-to-basics plan for the commercial broadcaster.

Mr Grade, the executive chairman of ITV, said that he would help to finance growth by eliminating £40 million from regional news budgets and by focusing on mass entertainment programming, such as The X-Factor.

“I didn’t take on the job of executive chairman to manage the orderly decline of a broadcaster,” Mr Grade said, and in a veiled criticism of his predecessor Charles Allen, said that the strategy was “based on self-help, not on relying on regulatory fixes to create the appearence of growth”.

ITV Play, the broadcaster’s controversial late night block of phone-in programmes, where callers were charged 75p to answer what were sometimes incomprehensible questions, is also to be closed. Mr Grade was forced to admit that the service had become uneconomic in the wake of a string of scandals.

Dawn Airey, ITV’s incoming head of global content, will have to double production revenues to about £1.2 billion by 2012. She has been told to aim to supply 75 per cent of ITV’s programming, up from 54 per cent now, as part of an expansion drive that will also include making £200 million available for acquisitions.

However, despite the target, Mr Grade insisted that the network – led by director of television Simon Shaps – was still free to commission the best ideas. “In the end, if I don’t support the network in its decisions, we might as well pack up and go home as a broadcaster,” the chairman said.

ITV2, the youth-oriented channel that will air Billie Piper’s call-girl drama Belle du Jour, will explictly try to overtake RTL’s Five as the number three commercial channel in the UK for 16-34 year olds. Its budget is being increased by £20 million to £70 million, with cash coming from regional cutbacks, but the overall money available for programmes will remain fixed at £1 billion.

Mr Grade reiterated that ITV1 had to improve the quality of its 9pm drama during the week, and said that the broadcaster needed to focus on longer-running series plus “fewer repeats, more football and more comedy”.

The broadcaster said it was close to striking a series of deals with video websites, such as YouTube or News Corporation’s MySpace, which would see it share advertising revenues for some of its clips – as it hopes to raise online revenues to £150 million in 2010.

It also plans to introduce online gaming, via a link with PartyGaming, as it tries to find new sources of revenue to replace phone-in television.

The strategy was released as ITV produced figures showing that viewing and advertising trends were improving. A strong August, aided by a weak Big Brother on Channel 4, helped to trim ITV’s rate of decline among audiences of commercial channels to 3.4 per cent in the year to date. Excluding August the decline was a more severe 4.8 per cent.

Strong bookings around the Rugby World Cup, as previously revealed by The Times, helped to push up the broadcaster’s third-quarter performance.

ITV said that advertising in the period was up 2 per cent on its core channel, and 5 per cent across the group, both one percentage point higher than predictions in August.

Paul Richards, an analyst with Numis Securities, called Mr Grade’s review “generally encouraging,” although the broker is not convinced that ITV can reach the £150 million online revenue target.

Mr Richards said he would upgrade his profit expectations for 2009 based on the regional news savings. ITV shares eased 1.7p to close at 111p.

ITN will reveal today that it has won a contract worth up to £10 million a year to supply a 24-hour sports news service to Setanta Sports News, a joint venture between Virgin Media and Setanta.

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