Michael Grade, the executive chairman of ITV, has warned that the broadcaster's £1bn programming budget could be reduced next year unless regulatory burdens including its public service broadcasting commitments are removed.

Grade said today that in a weaker advertising market regulatory issues such as contracts rights renewal, the formula that protects advertisers from ITV abusing its dominant market position in British TV airtime sales, and its public service broadcasting requirements needed to be resolved swiftly.

He added that ITV estimated that getting rid of CRR and cutting back on its PSB commitments would free up £300m of extra investment.

Grade's comments came as ITV today unveiled its results for the six months to the end of June and admitted that it faces a 20% year-on-year fall in ad revenue in September.

ITV's share price fell by more than 10% on last night's close, about 5p, to 41.5p in early trading today at 8.45am after the results announcement. The share price had recovered slightly to 42.3p by 11am.

The company also posted a 28% dive in adjusted pre tax profits and a 20% fall in operating profits year-on-year in its interim results for the first six months this year.

"It is unequivocal evidence, absolutely empirical evidence, that action needs to be taken now to relieve us. It is just not acceptable," Grade said.

"The value of the licences under which we operate has diminished. The regulator [Ofcom] fully understands the issue… where we differ is timing."

Grade said that "slashing" programme investment in 2009 would be a "false economy" that would impact the growth of ITV's business in the longer term.

"The thing most likely to impact our ability to maintain investment is the slowness of regulatory relief we require. That is the one thing that could hit programming budgets," he added.

Grade also said that it would be wrong to draw any firm conclusions about the state of the UK ad market in the fourth quarter of 2008 as a whole from the severe drop forecast for September.

The whole UK TV ad market during the last quarter is currently predicted to be down by between 5% and 8%.

ITV's total broadcasting revenues fell by £10m year-on-year to £832m for the six months to the end of June.

Flagship channel ITV1's net advertising revenue was £583m, down from £595m in the same period last year.

ITV's multichannel portfolio, including ITV2, saw revenues rise from £95m to £113m for the period.

Broadcasting operating profits fell by 21% to £89m, primarily due to the "front weighting" of the programming budget for the first half of the year, particularly Euro 2008, as well as lower income from premium-rate phone services.

Revenues from the global content division were up 3% year-on-year for the period, from £277m to £285m, with external revenues up 30%.

The company said that while internet advertising has continued to grow strongly there are "some indications that the wider slowdown in advertising will impact online revenue".

ITV's online revenues rose from £16m to £17m for the six months to the end of June.

Revenues at ITV.com - including itvlocal.com and ITV Mobile - increased by £2m to £7m, while Friends Reunited saw a £1m drop in revenues to £10m.

ITV also admitted that the competition regulator's investigation into Project Kangaroo, the broadband video joint venture with BBC Worldwide and Channel 4, meant there was now no chance the service would launch this year.

"As broadband video delivery continues to increase, we expect to see further internet video advertising growth, which our online properties will continue to exploit," the company said in its business review.

ITV also took a non-cash goodwill impairment charge of £1.6bn during the period against acquisitions in 2000 and 2004 that led to the creation of ITV plc.

This led to an interim loss of £1.54bn, down from a profit of £105m last year, although analysts have dismissed this and instead focused on the performance of ITV's ongoing businesses.

Before the goodwill charge, operating profits at ITV fell 20% year on year from £151m to £121m for the period to the end of June.

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