Granada Profits Hit By Ad Downturn, No Outlook Beyond July

Advertising revenues are set to rise for May (14%), June (7%) and July (6%), thanks to the boost in advertising provided by the World Cup. Granada has not forecast beyond this point saying that: “Although our current forecasts do not extend past July, this is encouraging news and we are in good shape to benefit from an upturn.”

Turnover was down 9% year on year at £713 million. Profit before tax and exceptional items for continuing operations, after a charge of £16 million for continuing digital businesses, was £43 million.

The increase in net debt for the first six months was £53 million. This does not include closure costs for ITV Digital which will fall in the second half, but does include the £99 million funding requirement of ITV Digital for the period and the closure of other digital investments. Net debt at 31 March 2002 was £39 million.

Charles Allen, Executive Chairman, said: “The global advertising market has remained challenging. Although the outlook is still unclear, NAR for May will be up approximately 14% and we estimate that June and July will be up approximately 7% and 6% respectively.

“In March we concluded that we could not continue to invest in ITV Digital unless its management could reduce its cost base and create a viable business plan. In the event, ITV Digital was unable to do so and administrators were appointed. The administrators were unable to restructure the business successfully and ITV Digital was subsequently closed.”

“We are only too aware of the consequences that this decision has had for many people but it would have been irresponsible for Granada to continue to fund ITV Digital without a viable plan that would deliver an eventual return for shareholders. We are now putting all our energies into driving our core broadcasting and content business. The ITV fightback starts now.”

Shares in Granada had fallen by ½p by midday today from an opening price of 129p.