For Michael Grade, ITV’s new executive chairman, diagnosing the problems of the largest UK private sector broadcaster is not difficult. Net advertising revenues fell 8 per cent last year. As well as a declining UK advertising market, it was further penalised by a regulatory system known as contract rights renewal (CRR), which, Mr Grade argues with some justification, prevents it receiving fair recompense for the mass audiences ITV1 still delivers.

Many hopes seem to be pinned on Mr Grade’s ability to reinject some creative vigour. His view that some of ITV’s older programmes were “past their sell-by date” finds few dissenters. The axe has already started to fall, new programming is coming in and no increase is expected in the £1bn budget for this year.

The trouble is that this solution has its limitations. Digital revenues are still not rising fast enough to offset declining ITV1 revenues. Despite a modest improvement in the UK advertising market, the company predicts a 4.5 per cent year-on-year decline in net advertising revenues in the first quarter, driven by a 9.2 per cent decline at ITV1.

Further relief is some way off. A change in the CRR regime is not expected until next year, and the financial impact would then be felt only in 2009. Even then, CRR is unlikely to be completely abolished, though its impact will probably be reduced. It is true that help could come sooner, if lobbying efforts prove effective, but success is far from certain and would not in any case boost this year’s advertising revenues.

At best, recovery seems likely to be more than a year away. At 18 times estimated 2007 earnings, ITV is already trading 30 per cent above the average FTSE 100 multiple – the biggest premium for almost two years. This already reflects considerable faith in Mr Grade’s creative powers.

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