ITV chief Allen's job on the line

ITV chief executive Charles Allen has been given a clear warning that he will be sacked if he does not expand the business.

Incoming chairman Sir Peter Burt said planned cost cuts so far were not enough and that Allen's priority must be to boost revenues.

Burt said: 'If he doesn't, we will have a real problem. You can't shrink your way to growth. We will have to grow the business or we are dead. It's more important to grow the top line in the long term.'

When Burt was appointed, he said he would not have taken the job if he did not support Allen, but he has toughened his stance.

Allen has promised savings of £100 million at ITV, which was created this month through the £5.5 billion merger of Granada and Carlton.

These will be achieved in part through the loss of hundreds of jobs in the two head offices, in administration and in both advertising sales forces. Up to 400 jobs were lost last week through the closure of ITV's Nottingham studios and the reduction of its Birmingham operation.

While praising Allen for his role in overcoming the regulatory obstacles to the merger, Burt warned that Allen must be judged on future performance. Burt, former deputy chairman of HBoS who joins on March 15, left Allen in no doubt that the axe would fall if he did not fulfil shareholders' expectations.

'I see no reason why Charles Allen should not succeed, but if he does not, then sadly that is a fact of life and there will be changes,' he said.

'If the management is not delivering, the non-executive directors have to do something about it.'

Allen survived when his opposite number at Carlton, Michael Green, was blocked from becoming ITV chairman after an investor revolt last year over the two men's future at the new company.

Shareholders were also furious over the pair's handling of ITV Digital, which collapsed in 2002 after losing £1.2 billion.

Burt would not comment on how much responsibility Allen should take for the collapse of ITV Digital, but clearly wants ITV to pursue an expansionist policy. 'If you do not try, you cannot succeed,' he said.

He accepted that ITV could become a target for other media companies. 'If it is in the interests of ITV shareholders to sell the company, we should do so,' he said. 'I'd have no hesitation in recommending that.'

Channel 4 is about to ask the Government for a change in its publicly owned, commercially funded status.

The move comes after it admitted it had been talking to shareholders in Five (previously Channel 5) about options, including the possibility of merging the two companies.