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Channel Five is to cut 87 jobs – about a quarter of its workforce – as part of a "comprehensive restructuring" plan that will see a flatter management operation introduced in the wake of the economic downturn.

The commercial broadcaster, which has predicted advertising revenues to drop about 10% this year, said the changes would "strengthen" the company by increasing its efficiency and profitability.

Dawn Airey, the Five chairman and chief executive, today briefed staff on the revamp, which will see up to 87 positions cut from a total workforce of 354.

Five said the new business plan would bring about "significant changes" to its organisation, with several key departments to be integrated, and a new "creative unit" to incorporate on-air and off-air marketing and creative services functions.

A new legal and commercial affairs department will incorporate the current legal and business affairs teams.

The changes come as Five battles a worsening ad market, with revenues predicted by media buying agencies to be down 20% for the first quarter – the worst performance of any of the major channels.

Airey said: "We are clearly in the midst of one of the most difficult financial environments in history. Five has therefore taken the necessary step to review all operations to ensure we continue to work as effectively and efficiently as possible.

"I am confident we are putting in place a new, streamlined structure which will ensure we remain the most agile and effective commercial broadcaster in the country. Unfortunately, the restructure raises the prospect of some positions being made redundant."

Five said it would launch a consultation with those departments and members of staff who are likely to be affected by redundancies.

A Five spokesman said that the number of staff leaving would be less than 87, with the remaining cuts made by not filling vacant posts.

Staff are being briefed about the cuts by their heads of department in a series of meetings today, where more details will be given about which jobs are at risk.

No details have yet been confirmed about changes to the commissioning system or which executives will be leaving.