ITV, the second biggest commercial broadcaster in the UK after Sky, has significantly tightened its grip on costs amid fears that Brexit will damage the advertising market.
On the day that a Markit PMI report said there had been a “dramatic deterioration” in the UK’s economy since the EU referendum, Business Insider has been told of an unofficial recruitment freeze and ban on pay rises at ITV.
Separately — and before the 23 June Brexit vote — ITV took a decision to close its defined pension scheme. A consultation was launched in recent days and will run until October, with hundreds of longstanding members of staff set to lose out when they retire.
An ITV insider said: “After the vote, a message was trickled down verbally to managers that there’s a recruitment freeze and no pay rises. That doesn’t just mean expansion, it means replacing people. Every hire has to be justified up the organisation in a way I’ve never seen before.”
Nothing has been put in writing to staff and ITV is still hiring if a firm business case can be made, but another senior source acknowledged that there has been “belt tightening” since Britain decided to leave the EU.
ITV chief executive Adam Crozier has been open about the fact that the EU referendum has created “uncertainty” in the advertising market.
Any downturn could put a significant dent in ITV’s revenues of £3.4 billion ($4.5 billion), but the business is much better balanced than it was during the financial crisis in 2007/08 and around half its turnover comes from sources other than advertising.
Crozier has invested heavily in ITV’s production arm, ITV Studios, to the point where it is now the biggest independent producer of unscripted television in the US after acquiring companies such as “Pawn Stars” producer Leftfield Entertainment.
The chief executive will address investors next week when ITV announces its earnings for the first half of 2016.
A spokesman said: “The strategy we set out in 2010 is clearly delivering. ITV is now a high growth business with increasing emphasis on international content creation and distribution, and is demonstrably much stronger, both creatively and financially, than when we set out on our plan.
“We remain firmly focused on continuing with our strategy and we will continue to do what we do really well – which is to create and broadcast great programmes and sell them around the world.”
Pension changes will ‘hit the pockets’ of veteran staff.
As well as general belt tightening, the closure of the defined pension scheme should deliver a substantial saving for ITV. Members of the final salary scheme will be moved over to ITV’s existing defined contributions scheme.
The average cost to ITV of funding defined pension members averages out at £10,000 ($15,700) a year per person, compared to £3,700 ($4,800) for the defined contributions scheme. ITV’s current defined pension scheme deficit stands at £176 million. It has been closed to new members since 2006.
“It will hit the pockets of lots of long-term staff. It will basically mean they get less [after they retire],” a source said.
An ITV spokesman said: “We are proposing to close the defined benefit section of the pension scheme later this year and give active members of this scheme the option of building up benefits in a new ITV defined contribution scheme instead. We will be consulting with these members shortly.”