ITV cuts pension deficit £124m

ITV has cut £124m from its £550m pension deficit, it revealed today through an "asset backing" initiative that has won praise from the City. The broadcaster, which during the nadir of the downturn in the first quarter last year threatened to be overwhelmed by its pension commitments , has put out more details of a plan set out last October to use its Freeview multiplex operation SDN to provide "asset backing" for its pension scheme. ITV's pension deficit stood at £550m as at 31 December. The arrangement, agreed in conjunction with the trustees of the ITV pension scheme, has already led to a £124m reduction in the pension deficit. The company's pension deficit is an issue that City analysts have long said needed to be tackled for the broadcaster to become a viable takeover target . ITV has also restructured how it makes ongoing pension deficit funding contributions. The broadcaster previously had agreed to pay £30m a year until 2013. This has been modified with ITV agreeing to pay down the deficit by £35m a year from 2011 through to 2014. However, from 2012 the annual contribution will increase to £40m unless ITV of its own accord "implements initiatives" to reduce the deficit by at least £10m. In addition if, from 2012, ITV's earnings before interest, tax and amortisation exceed £300m – for 2009 it recorded ebitda of £202m – the company will increase its payment by 10% of the amount it made above this level. ITV has also committed to making a payment of up to £150m in 2022 if the pension scheme remains in deficit at that point. And it will make an annual distribution of £8.4m to the pension scheme for 12 years from next year. The widely praised plan to link SDN, which has revenues of about £40m a year, and the ITV pension scheme was masterminded by outgoing chief operating officer John Cresswell and finance director Ian Griffiths. "Over the last 18 months, ITV has made significant progress in strengthening its balance sheet and managing its pension risk," said Griffiths. "Today's agreement materially reduces ITV's pension deficit on the basis which drives our cash funding and confirms the contributions ITV will be making to the main section of the pension scheme through to 2014. It represents a positive deal for members of the defined benefit pension scheme and for ITV's shareholders." • To contact the MediaGuardian news desk email [email protected] or phone 020 3353 3857. For all other inquiries please call the main Guardian switchboard on 020 3353 2000. • If you are writing a comment for publication, please mark clearly "for publication".