The X Factor has been stuck in a perpetual ratings slump in recent years, consistently losing to BBC rival Strictly Come Dancing.
Meanwhile, Britain's Got Talent has remained a fairly steady performer, capable of pulling in over 10million viewers.
This has prompted speculation that Simon's firm Syco sells the shows as a package - meaning he'd pull the plug on BGT should the axe be swung on XF.
However, ITV's chief executive Carolyn McCall denied that he is holding the broadcaster "to ransom".
Speaking to the Broadcasting Press Guild, she said: "I don’t think he’s holding us to ransom. He wants to work with us and we want his shows and Simon is more than aware."
While the businesswoman acknowledged X Factor is "massively down", she insists it still brings in the business.
"We don’t have any problems sponsoring X Factor," she claimed. "There are people lining up to sponsor it. It’s not a struggle for us to sell X Factor.
"[It does] amazingly well with some of the audiences we really, really want to attract."
Carolyn also touched on Simon's recently-announced plans for an X Factor shake-up.
The mogul wants to postpone the next regular series of the talent contest, in favour of airing two separate spin-offs later this year.
One would be a 'Champions' edition featuring returning 'all-stars', while another would be a revival of Battle Of The Stars, featuring celebrity contestants.
"He wants The X Factor to be transformed in some ways," Carolyn explained. "He is the one who will drive that. It’s his show.
"It could be very interesting to see what he brings to that this year. It will run in the autumn. We’ve been saying we’d like to see it changed."
BGT is also planning a 'Champions' edition, with Susan Boyle and Ashleigh Butler reportedly in talks to take part.
The 13th series of the variety show will hit our screens on April 6th.