ITV programme budget lacking

ITV needs to boost its spending on programmes dramatically to avoid losing viewers to Channel 5 and satellite and cable television, according to new research from Merrill Lynch.

Channel 5 has eaten into ITV's audience share as the network has failed to increase its programming expenditure sufficiently, figures from the investment house show.

ITV, which increased its programme budget by just 3 per cent to pounds 602m for 1996/97, saw its audience share dwindle between April and July from 34.4 per cent last year to 31.6 per cent this year.

Channel 4, which grew its spending on programmes by 16 per cent to pounds 310m this year, increased its audience share from 10.6 per cent last year to 10.7 per cent this year despite the launch of another rival, Channel 5, in the spring.

The Merrill research concludes: "It is no surprise that Channel 4 has held its viewership share in 1997 due to its increased firepower, while ITV has seen a significant reduction."

The threat to ITV's audience share will be exacerbated when the Channel 4 funding formula is phased out over the next two years. Channel 4 has so far paid the ITV companies pounds 257m through the formula, and has promised to spend the money saved on more original British programmes and films.