"As a result of the challenging economics of local television and anticipated increased competition from BBC Scotland, we have taken the hard decision to close our loss-making STV2 channel to focus our future content investment on STV and the STV Player".
STV said it would use the cost savings plus other redirected content spending to allocate £15 million for new investments over the next three years, the majority of which will be spent on new original content.
STV announced this morning a swathe of cuts to staff which will allow them to move forward as Scotland's home of news and entertainment.
The new organisational structure will create three distinct divisions across broadcast, digital and production, each with its own managing director.
"More under 55s browse STV news online than watch our regular bulletins", it said.
The additional payments, published in STV's annual report, were to compensate him for rewards he gave up on leaving ITV, where he was managing director for online, pay TV, interactive and technology.
John Toner, national organiser NUJ Scotland, said: "Today's announcement to cut 59 jobs across STV news and STV2 is a devastating blow to the staff who work tirelessly to provide some of the best news and current affairs programmes in Scotland.".
Several jobs on the digital news desk are also likely to go.
Mr Pitts said: "This is a positive vision for STV that will re-establish the company as a creative force in Scotland and beyond". However, given how quickly news consumption is changing it is vital that STV evolves to stay competitive, and we are therefore launching a comprehensive change programme - STV News 2020 - that will see us invest in skills, technology and digital as well as delivering cost savings.
STV said its growth strategy aims to establish the producer-broadcaster as Scotland's "home of news and entertainment".
STV also took the opportunity to confirm the launch of a £5m advertising growth fund billed as a tool to help maximise its share of the advertising market as well as agreeing its first ever content partnership for the STV Player catch-up service which will include a new ad-free subscription option.
He thanked the STV2 team for everything they had achieved.
The formats unit will focus on ideas for the United Kingdom and global markets, with pilots airing on STV.