ITV first-half profits climbed strongly and it said today it would team up with the BBC to launch a free satellite service next year, in a broadside against pay-TV leader BSkyB .
ITV is trying to keep as many viewers as possible watching free TV, where it faces less competition from hundreds of pay channels.
The country's largest commercial broadcaster has already suffered a tough summer in which its flagship ITV1 channel lost viewers to rival Channel 4, which had hits such as Big Brother and Lost.
ITV1 ad revenues were down 3.4 per cent in the first half and overall ad revenues were flat excluding acquisitions.
The free satellite service from the BBC and ITV - slated to launch in the first half of next year - is intended to compliment Freeview, the fast-growing terrestrial service which is in more than 5 million homes but only available to about 75 per cent of the population.
"This is great news for viewers. It paves the way to provide subscription-free digital television across the whole country," said BBC Director General Mark Thompson. The country is planning to switch off its analogue TV signal by 2012.
As part of the satellite launch, ITV plans to broadcast its channels "in the clear" without encryption, so that viewers will not need to have a special conditional access card. The encryption service is currently provided by BSkyB, and renewal talks between the companies have been bumpy, including a complaint by ITV to media regulator Ofcom.
Sky has a free satellite service of its own, but it has received little publicity as Sky concentrates on increasing the size of its subscription service.