ITV, Britain's largest commercial broadcaster, has been forced to slash its dividend and its growth targets after plunging into a £1.5 billion loss in the first six months of 2008 and announcing advertising revenue will fall by 20 per cent in September.

Overall revenue at ITV grew by 3 per cent in the six months to June 30. However, the company expects total TV advertising revenue to fall by 1 per cent over the eight months to August, before declining by 20 per cent in September.

Shares in ITV fell 12.5 per cent to 40.5p in early trading, giving the company a market value of £1.5 billion, which is the same figure as the pre-tax loss it reported today. They later recovered to 42.7p.

The company blamed "tough year-on-year comparisons" for the 20 per cent fall in September, primarily due to last year's Rugby World Cup for the slump. However, advertising revenue generated by its flagship ITV1 channel fell by 5.1 per cent over the interim period.

Global content revenue rose 3 per cent over the six month period and online revenue increased by 6 per cent.

ITV said the loss in the first six months of the year was due to a £1.6 billion impairment charge on mergers and acquisitions.

In 2000, the company paid £1.75 billion to buy United News & Media's three commercial TV franchises, and in 2004, Granada and Carlton merged to create ITV.

Stripping out the charge, pre-tax profits plunged by 28 per cent, from £127 million last year to £91 million.

The company cut its interim dividend from 1.35p to 0.67p.

Today's dismal results will be an embarrassment for Michael Grade, ITV's executive chairman, who joined just over a year and a half ago from the BBC with a remit to turn round the fortunes of the ailing broadcaster.

Since Mr Grade joined in January last year, ITV's share price has fallen by 63 per cent.

During that time, ITV has made a number of appointments, including its new director of television, Peter Fincham, who left the BBC in the wake of the "crowngate" scandal, where footage of the Queen was edited to show Her Majesty apparently storming out of a photo shoot.

ITV announced today that the company will cut an additional £35 million worth of costs from the business by the end of 2010. ITV said today it is "on track" to deliver savings of £41 million by the end of this year, and £40 million by the end of 2009.

The company has also readjusted its growth targets. It said: "The board remains confident that the turnaround strategy will deliver sustainable, long-term growth and is therefore maintaining its investment in programming.

"However, given the market uncertainty, ITV is revising its global content and online targets."

In global content, ITV was attempting to double its annual revenues to £1.2 billion by 2012. The target has now been reduced to £1 billion by 2012.

Online revenues are expected to grow to £150 million by 2012 instead of the previous 2010 target.

ITV blamed the shift on regulatory delays to the launch of its Kangaroo project, a website that would allow viewers to watch archived programmes from the BBC, ITV and Channel 4.

Last month, the Competition Commission announced that it would look into whether the proposed Kangaroo service would damage competition.

The company also said: "ITV had previously set a group revenue target of 3-5 per cent compound annual growth to 2010.

"With broadcasting revenues accounting for 80 per cent of overall revenues, group revenue growth will be largely dependent on television advertising market growth."

Mr Grade said today: "'Whilst our visibility on advertising revenues beyond September is limited, with a strong schedule in place for the rest of the year and planned for 2009, we are confident that we will continue to outperform.

"However, we cannot control the economic environment in which we operate. As a result of the recent slowdown in the television advertising market, the board has taken some tough decisions, which are reported here today."

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