For Broadcast February 18, 2009

ITV is desperately searching for more ways to save money to survive

Second-guessing what ITV will say when its results are announced on March 4 is probably a fool's game, but it's no secret that there have already been programme cuts – less of The Bill, less Heartbeat, the axing of Wire in the Blood and the dropping of a new adaptation of A Passage to India.

ITV's strategy for recovery may still be content-led, but it is likely that it will be with less money for programmes – the £1bn heretofore sacrosanct programming budget is being chipped away.

The emergence of a more commercially ruthless ITV is personified in Lee Bartlett, the MD of ITV Global Content who came over from Fox TV in America nine months ago. His was one of the voices arguing to dump A Passage to India, saying a three-hour, costume drama is "never going to make enough money" because it wouldn't sell well outside the UK.

"I would have developed it very differently," said Bartlett to a Broadcasting Press Guild lunch this week.

Michael Grade must be thinking he would like to develop the ITV Plc script very differently too but, at the moment, the best survival plan may be more cuts and bolstering the balance sheet while keeping fingers crossed that Bartlett & Co come up with a new global hit or two. Maybe the new co-production deal with Simon Fuller's 19 Entertainment, the owner of American Idol, will deliver.

Given the horrendous TV advertising environment with little relief in sight and a pension fund overhang that needs solving, it's not a question of what levers Grade pulls, but how many.

More job cuts – another 10% cut is mooted – could save the company £35m. A 5% programming budget cut could save £40m to £50m.

Suspending the dividend could yield £60m. A sale of Friends Reunited might (or might not) yield £40m, although it is hard to see who would be a buyer in this market. Perhaps a better asset sale idea would be ITV-owned DTT multiplex SDN, which, according to Numis Securities, could yield as much as £100m through a sale.

In my opinion, selling ITV's production assets should not even be part of the discussion. But there is also the idea of a rights issue. Numis thinks that ITV might comfortably raise £300m even if Sky, as a 17.9% shareholder, stayed on the sidelines. "The medium terms prospects for ITV are good," says Numis analyst Paul Richards. The problem is getting through the short term.