Michael Grade, the chairman of ITV, came out fighting yesterday after a testing first year in which profits and the share price at the commercial broadcaster plunged and an on-screen revival failed to materialise.

Pre-tax profits fell 35 per cent to £188 million in Mr Grade's first year at the helm, and 2008 has begun with ITV1 ratings slipping 2.5 per cent despite the return of News at Ten and the introduction of a string of more ambitious dramas at 9pm.

However, Mr Grade picked on other data to show that when ITV's digital channels are included, the broadcaster's overall audience had increased for the first time since at least 1994 - from 23.1 per cent in 2006 to 23.2 per cent in 2007- a trend that continued into 2008.

“This is a three- to five- year turnaround. You may characterise my presentation as upbeat; I'd characterise it as factual. We got 50 per cent of the commercial audience on Sunday night,” he said.

“We're in this for the long haul. People who have not watched ITV in years are coming back.”

The ITV boss was also quick to defend the new schedule, which has seen the royal drama The Palace and Moving Wallpaper, a comedy set behind the scenes of paired soap Echo Beach, deliver poor ratings.

He said that “you can't pick one time period or one night [to judge performance]” and argued that ITV was innovating. “Is the creative community responding? You bet they are. When I arrived, we were the last shop in town anyone wanted to bring a good idea to.”

ITV shares added 0.9p yesterday to 67.4p, but the stock is off 36 per cent since Mr Grade joined in January 2007. He said that “reflected widespread concern about a European consumer slowdown” and worries about a forced sale of part of BSkyB's 17.9 per cent stake - “a large overhang that does not help”.

ITV said that it saw no immediate sign of the feared slowdown, with advertising revenues across ITV up by 1.9 per cent in the first three months of the year, followed by a modest 1 per cent decline in April.

However, Lorna Tilbian, from Numis Research, argued that the company was “dancing on thin ice” in a note that said “it was only a matter of time” before a deteriorating British economic outlook fed through to a business 21 per cent dependent on advertising from retailers.

Sentiment was not helped by downbeat figures from Johnston Press, the regional newspaper group that owns The Scotsman, which said yesterday that advertising revenues were down 4.2 per cent in January and February. Tim Bowdler, chief executive, said: “We're not getting a great deal of help from the economy.”

ITV group turnover fell 5 per cent to £2.08 billion, due in part to a £52 million decline in revenue from phone-ins to £53 million last year, in the wake of a series of scandals.

ITV took an £18 million charge to pay for fines and viewer refunds. Revenues from producing programmes for outside broadcasters also fell £37 million to £244 million, as ITV failed to win drama commissions in a division that is under pressure to double turnover by 2012.

Peter Bazalgette, the former chief creative officer of Endemol, said: “I think there is still a lot of sympathy for Michael Grade because there's nobody out there that has a blueprint that is much better, and they might be able to rally audience share if they can get a few decent dramas at 9pm.”

The thoughts of chairman Grade

— "I have never known a time in ITV's history - and I've been following it quite closely since 1955 - when the schedule looked as fresh and reinvigorated as it does, night after night"

— "You may not like some of the shows, some will catch on and some will not - that's the nature of the game. But people are talking about the ITV schedule. It's an unbelievable change"

— "BBC1 had a new show the other night with 2.3 million viewers - do you say BBC1's schedule is falling apart? No, it's very hard to launch new shows today"

— "We have come a hell of a long way in the last couple of years, particularly in the last year"

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