Michael Grade's first year in charge of ITV has seen annual profit fall 35% to £188 million. The broadcaster has suffered from difficult advertising markets and investment in digital channels.

The chairman has stood firm against the negative performance, saying that ITV's group of channels delivered their first viewing increase since the early 1990s.

Net advertising revenue at ITV1 fell 4% in 2007 compared to a 12% drop in 2006. Across the group, net advertising revenue was flat at £1.5 billion for 2007.

Digital fared better, with a 33% increase in advertising income to £209 million. Six million people now visit the broadcaster's website, itv.com, each month following a relaunch in 2007.

It is planning a push this year on advertising across Friends Reunited, the social networking website. Viewers will also be able to watch more programmes online through ITV's main website.

Despite the drop in annual pre-tax profit, ITV has maintained its full-year dividend of 3.15p per share. Advertising revenues since the start of 2008 have increased by 2%.

Michael Grade said: 'The first priority for ITV was to stem the decline. We did more than that, delivering an increase in viewing to the ITV family for the first time in over a decade.'

'For the first time in many years, ITV1 outperformed its competitors and we've continued to do so into 2008."

Michael Grade last week agreed to stay in post as executive chairman until the end of 2010, one year longer than his original three-year term. The broadcaster said it would also split the roles of chief operating officer and group finance director - currently held by John Cresswell. It will now seek to recruit a separate finance head. Former BBC1 controller Peter Fincham has been appointed as ITV's new Director of Television.

Shares in ITV have fallen dramatically over the past year as investors continue to sell out of the stock on worries over the advertising market. The shares dropped 1% on Wednesday morning to 65.8p. Eight years ago, ITV was trading nearly four times higher at 255.45p.

'There has been) a lot of comment about personnel changes and plans to move the business forward but no real evidence of this having a tangible effect as yet – as we are only five months into the “turnaround plan”,' said Investec analyst Steve Liechti.