Analysis: the sale of Friends Reunited

ITV this morning announced that it is cutting 600 jobs as it admitted that write-offs have pushed it into the red.

Britain’s biggest commercial broadcaster, which wrote off some £2.7 billion from the value of its assets, also refused to rule out tapping shareholders for cash as it suspended their dividend payments.

ITV also announced heavy cuts to its programming budget — which will be slashed by £65 million this year, frozen next year and cut again by £70 million in 2011.

The broadcaster also confirmed plans to sell Friends Reunited, the social networking website, for which it paid £175 million three years ago. The directories business, Scoot, will also be sold.

Michael Grade, ITV’s executive chairman, warned that, during the first three months of 2009, he expects net advertising revenues to be down some 17 per cent on the same period last year.

He said that, for April, ITV expected to outperform the total market, which is expected to be down some 20 per cent.

Mr Grade said: “Current conditions in the advertising market are the most challenging I have experienced in over 30 years in UK broadcasting. This is reflected both in our financial results for 2008 and the tough actions we are announcing today.

“The world is a very different place from where we were a year ago. The advertising market deteriorated significantly in the second half of 2008 and further in 2009 — and our priorities are being aligned to the changed economic context.

“When the cycle turns and the economy comes back — and it will — ITV will be in good shape. But clearly these are both unprecedented and extremely difficult times.

“We know we’re delivering a fabulous product and we’re cheap for the advertisers.

“These are difficult times, but we’re confident the steps we’re taking now will result in a leaner and fitter ITV. It’s not that long ago that people were writing off ITV as a spent force with the viewers — we’ve turned that around dramatically in the last two years and are increasing our share of advertising, which many said was impossible.”

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