MICHAEL SETTLE and DAMIEN HENDERSON

ITV is to put original programme making at the heart of its operation in a bid to turn around the commercial broadcaster's ailing fortunes at the expense of regional news coverage, its chief executive said yesterday.

Unveiling a long-awaited five-year plan yesterday, Michael Grade said he wanted the broadcaster to be the UK's favourite source of free entertainment by 2012.

Part of the merger of newsrooms, which it is hoped will free up £40m to be ploughed back into making programmes, would involve the death knell for Border Television, critics claimed last night.

While the broadcaster has made clear the services for London, Wales and the Granada region around Manchester will not be affected, it hopes to reduce local newsrooms from 17 to nine by merging some services.

This will mean Border will merge with Tyne Tees and a similar process will occur in other parts of the UK; for example, Meridian and Thames Valley will amalgamate into one service.

But the five-year plan - described as "fiscally cautious" by John Cresswell, ITV's chief operating officer - does not involve new cash.

Instead, investment in programming will be achieved by shuffling assets around and streamlining its regional news operation - a move which sparked an angry response from unions last night who said they would oppose any job cuts.

This would be achieved by doubling revenues from the group's content business to £1.2bn by 2012 and seeking to source 75% of its commissions from ITV Productions - the maximum allowed under current broadcasting regulations.

Mr Grade also moved to put water between ITV and the scandal of misleading premium rate phone-ins, saying he would phase out ITV Play's call TV programming by the end of the year.

The aim is to restore the quality of ITV programming, which has suffered from a succession of flops, and have more long-running dramas such as Inspector Morse, Cracker and Prime Suspect.

The growth, Mr Grade said, would be self-funded and "content-led". He added: "Inevitably, I'm sure that there will be have to be some redundancies but at this stage I'm not sure it is helpful to start throwing numbers around."

Mr Grade, who rejoined ITV nine months ago after former chief executive Scot Charles Allen resigned last year, said he wanted to "maintain and accelerate" ITV1's recent ratings improvement and reaffirmed that the target of the group's network of channels was to achieve a 38.5% audience share by 2012.

Last night Mr Grade's plan came in for severe criticism from politicians and unions.

David Mundell, the Shadow Secretary of State for Scotland and Conservative MP for Dumfriesshire, Clydesdale & Tweeddale, said: "ITV's plan to merge its smaller companies such as Border TV is appalling and unacceptable for the area.

"This is a clear disregard for the viewer and it is clearly driven by cost-cutting."

Bectu, the broadcasting union, also criticised the plan, claiming the "swingeing" cuts would leave many of the 1045 people currently employed by the ITV News Group at risk of losing their jobs.