Mancunians of a certain age still tune in regularly to Granada Reports. Across the Pennines, in Yorkshire at 6pm, Calendar holds sway.

For decades these nightly news programmes gave ITV its strong regional identity. For many, it still does, although if Michael Grade, ITV’s executive chairman, gets his way, perhaps for not much longer.

“We want to continue it as long as we can but not when it becomes uneconomic,” he said.

Hundreds of jobs are already being cut in newsrooms.

When Grade swept into ITV 21 months ago, everyone thought he would concentrate on improving the shows at the beleaguered broadcaster.

What they got was a sustained campaign to roll back a cat’s cradle of regulation that has led ITV to consider giving up the public-service remit that has guided it for 53 years.

Under one of two options for its future, to be decided before Christmas, ITV will hand back its broadcasting licence to regulator Ofcom, freeing it of any obligation to provide news, regional output and even quotas for domestic drama that it says compromises profitability.

“That way, they can’t take anything on trust; it is irrelevant,” said Grade. “We just do what we want to do - complete freedom. We may or may not do news - it’s our choice. We would be a proper business.”

Under the second option, where ITV would continue to produce national and international news and guarantee a level of British production b e y o n d 2 0 1 2 , G r a d e h a s embraced a plan floated by Ofcom for a state-subsidised third party - perhaps ITN, the Press Association or Reuters - to provide regional news that could continue to air on ITV1.

It sounds a radical departure, but ITV is watching the pennies these days.

Far from being an asset, regional news is regarded as an £80m-a-year millstone, one of several.

Grade’s hope is to modernise ITV with a once-and-for-all settlement with the regulator and government that will give it greater freedom in a digital age.

Will such a shake-up make more people tune in? Not necessarily. But it will give Grade the chance to concentrate on luring viewers to please advertisers instead of box-ticking. He estimates the company has spent the best part of £10m just on managing all its regulatory reviews on his watch.

It is hard not to sympathise with ITV. Even with the prospect of regulatory relief, house broker UBS cut its price target from 28p to 25p last week, slicing its earnings-per-share hopes by 24% for 2009. The savage fall in advertising has pushed ITV’s shares down 66% in a year and the company, with a market value of £1.4 billion, out of the FTSE 100.

Beyond public service, Grade is eyeing two other money-making opportunities: increasing the advertising he is allowed to air in peak time and product placement - getting paid to include branded items in shows - which could be worth £100m a year. Both look likely to be approved.

There are worries that letting advertisers run riot would compromise programmes, but Grade points to the US or films where product placement is common. “I haven’t noticed civil unrest when we put a Bond film out,” he said. “Consumers are so savvy that if you overegged it they’d switch over.”

On top of everything else, contract-rights renewal, introduced to protect advertisers when ITV was formed from the merger of Granada and Carlton in 2004, is under review by the Office of Fair Trading.

Not everything is going his way. Kangaroo, an online catchup service that would pool BBC and ITV shows, became mired in a probe before it began. But assuming Grade gets most of his w i s h - l i s t , w h a t w o u l d a regulation-free ITV1 look like in 10 years’ time? “The chances are it will be full of UK-owned and originated programming.” So it wouldn’t look much different? “I don’t think it would, no.”

Filling the channel with cheap imports isn’t an option, not least because they aren’t so cheap anymore. Inflation has taken its toll and any benefits from buy-ins are short-lived.

“If you buy a n e w s h o w f r o m America, say £250,000 an episode against £1m [to produce an episode] for UK drama, they will only do a two-year deal at most. Supposing the show is a hit, Sky comes along and bids £1m an hour for it.”

Aside from that problem, producing in-house hits is a corner-stone of Grade’s strategy. When it was a monopoly, money rolled in from advertisers and the programmes lent a hand in winning an audience. Now it is the shows, which ITV aims to sell abroad, that are the tail that will increasingly wag the dog as advertising struggles.

After BSkyB - 39% owned by News Corporation, ultimate parent of The Sunday Times - was ordered to sell down its 17.9% stake in ITV, takeover talk is back on the agenda. But Grade still thinks ITV can have an independent future.

“If we deliver the turnround p l a n a n d k e e p s h o w i n g progress, absolutely. If the earnings come through, somebody would have to pay a lot of money to take us out,” he said.

Doubters think he should consider a more radical plan instead of hitching ITV’s wagons to free-to-air programming, but Grade is unlikely to revisit pay-TV.

“There are only two things that sell subscriptions - sport and pornography,” he said. “I used to be the pornographer-in-chief but I’m too old now. And Sky’s got sport sewn up.”

Ads hit

FORWARD bookings give ITV only six weeks’ visibility of advertising income, but it doesn’t take a crystal ball to predict that the downturn is deepening.

Michael Grade cites the latest analysts’ forecasts that suggest TV advertising income will be down 5% in 2008 as a whole, indicating a 10% drop for the sector in the final quarter.

Zenith Optimedia is gloomier. It predicted last week that TV advertising would fall by 6% this year and newspaper spending would drop by 4.9%.

It reined in forecasts for overall advertising in 2008 from 2.4% growth to a 2.1% decline.

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