For Broadcast October 01, 2008

What is the significance of ITV's regional job cuts?

It's not a great time to own shares right now, what with a tanking financial marketplace and bankers losing their jobs across the sector.

But, rather than just reporting the news, ITV has got in on it, axing some 430 news staff in the regions as part of a total 1,000 jobs promised to be shed by next March. That equates to a whopping 18% of ITV's workforce.

But the news doesn't actually feel that new, despite what the press release says.

It feels appropriate to cue the News at Ten "bongs" here - Bong - "ITV on track to deliver cost savings." But how new is this strategy? Ex-ITV boss Charles Allen also cut jobs and argued for less regulation (ditto current ITV executive chairman Michael Grade). Perhaps, if there are still 1,000 jobs left to cut, he was not the hatchet-man we thought.

Bong - "We have to keep on top of our cost base." But ITV is already playing catch-up to a market that has pushed it out of the FTSE 100. In this financial climate, no institution cares about mid-cap shares and that's where ITV is right now. Surely, this makes it even more likely that Sky will appeal against the Competition Commission decision that it must sell down its ITV stake (at a potential loss of £600m plus and counting).

Bong - "The cost efficiency programme is designed to sustain ITV plc's £1bn investment in UK content." But Grade has made the budget sacrosanct for only two years and those 24 months are up at the end of 2009.

Given Grade admitted at the RTS conference last week that he only has six weeks' visibility on his revenues, his £1bn programming budget looks increasingly vulnerable. The job cuts were terrible news for those involved, but cuts to the ITV budget could spread the gloom to the whole of the indie sector.