In the report, the commission said that although ITV provided a "good range" of drama with shows such as 'The Forsyte Saga' and 'Dr Zhivago', it was the number of soaps that are "posing a threat to diversity in peak time".
Channel 4 came under fire for putting in a "disappointing" performance in this genre after promising to refocus on contemporary drama. The broadcaster has since committed to return drama to the "heart of the schedule in 2003".
All three broadcasters were praised for their current affairs coverage. ITV is said to have exceeded its coverage with two editions a week of 'Tonight with Trevor McDonald'.
It said Channel 4 continues to provide "strong international coverage and investigations", while Five's current affairs coverage came in the form of 'The Wright Stuff', which the ITC said it welcomed.
ITV's reality game show 'Pop Idol' was praised, but ITV's former ratings successes such as 'Blind Date' and 'Who Wants to Be a Millionaire?' were said to be less reliable audience grabbers last year.
ITV, along with public service rival BBC One, lost audience share this year. However, the audiences of Five, Channel 4 and BBC Two increased, while Channel 4 increased its share of viewers aged 16-24 years.
UK TV advertising revenues were down 7% in the year to September 2002 to £3.22bn, from £3.47bn in 2001, although the ITC said there were signs of a recovery towards the end of the year from Channel 4 and Five.
Channel 4's net advertising revenues rose 5% to £632m, while Five's rose 23% to £236.6m.
The ITC said advertising complaints rose to 7,830 from 7,796 in 2001. The most-complained-about ad last year was Pot Noodle's "the slag of all snacks", with 310 complaints. The objections were upheld by the regulator because it contained offensive language.
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