Morgan Stanley Downgrades ITV Forecasts
There appears to be no improvement in ITV advertising levels on the horizon, according to Morgan Stanley analysts, with September looking unlikely to provide the previously-anticipated pick-up in trading.
At a broadcasting conference held by Morgan Stanley, a major UK media buyer told analysts that his firm sees no sign of recovery in September, with revenues set to be down by 5-6%.
A weak September is significant for ITV, because it receives a greater contribution to full-year revenue from the month, than from June or July. Indications are that June will be down by 18-20%, with falls of 8-10% in July and August.
Morgan Stanley had been expecting a decline of around 3% in the calendar Q3 (ITV’s Q4). Given this latest information, -3% seems too small a drop for the quarter, as it implies 6% growth in September. Analysts have reduced therefore their forecast to -7% accordingly; the changes bring the growth forecast for the year to September (ITV’s full-year) to -2.8%, down from -1.9% previously.
Calendar full-year forecasts have been reduced from -2.5% to -3.5% on the assumption that Q4 will be flat. Morgan Stanley says that based on the comments of industry experts, this assumption does not appear to be unduly conservative.
| ITV Advertising Growth Forecasts | ||
| Old | New | |
| Q1 2003A | 2.5 | 2.5 |
| Q2 2003A | -5.0 | -5.0 |
| Q3 2003 | -2.5 | -2.5 |
| Q4 2003 | -3.0 | -7.0 |
| Q1 2004 | 0.0 | 0.0 |
| Year to September 2003 | -1.9 | -2.8 |
| Calendar year 2003 | -2.5 | -3.5 |
| Source: Morgan Stanley, June 2003 | ||
By way of comparison, Merrill Lynch analysts have predicted a 2.5% fall in ITV’s revenue in the year to September, with declines of -20% and -10% in June and July.
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