ITV, the main commercial broadcaster in Britain, reported a loss of over £1.5 billion for the last half year, after writing down the value of the goodwill in its broadcasting licences as a result of reduced advertising market forecasts. The underlying profits for the last six months were also down by 28%. The broadcaster blames a weak advertising market and warns it is going to get worse.

ITV reported profits of £91 million on revenues of £1 billion for the last six months, before imposing an impairment of £1.5 billion on the value of goodwill it recognised in the merger of Granada and Carlton leading to the creation of ITV plc.

It reflects the fact that the value of ITV as a commercial broadcaster, which once had a virtual monopoly on television advertising and is still dependent upon it for 70% of its revenue, is in almost inevitable decline as a result of audience fragmentation across multiple channels and a weaker television advertising market.

The broadcaster does not appear to have any convincing response to address this. It has reduced its previous forecasts for overseas sales and online revenues. It had hoped to raise £150 million a year in online earnings by 2010 and it has now put this target back to 2012. In part it blames delays in launching its planned Kangaroo video on demand project with the BBC and Channel 4.

In the last six months ITV recorded only £7 million in online advertising revenues from its web site, little more than in the same period the previous year.

Michael Grade, the former BBC chairman who joined ITV in 2006 and instituted a five year turnaround strategy, hopes that a strong autumn schedule, headed by popular hits like I’m a Celebrity… Get me out of here! will restore the fortunes of the franchise, once famously seen as a licence to print money.

“Almost a year into the turnaround strategy, we have made considerable operational progress,” he said. “With more viewers watching more ITV programmes, we are delivering greater value for advertisers.”

Nevertheless, its share price is now down nearly 60% on the year and only a fifth of its value at the start of the decade. In the light of what it described as “the uncertain economic outlook” the board also halved the interim dividend.

ITV appears to be quick to blame the economic environment, describing the current downturn as cyclical. Industry analysts suggest that the problems at ITV go back far further than that and are more likely structural.

There is worse to come. ITV says it is expecting advertising revenues, which have remained relatively flat over the last half year, will fall in the next six months, although ITV says it hopes to outperform the market.

BSkyB, which acquired nearly 18% of ITV in late 2006 and has since seen the value of its shares fall by nearly 70%, is appealing against a requirement for it to reduce its stake to less than 7.5%. That could trigger a possible takeover of ITV at its currently low valuation.