ITV Revenue Forecasts From Lehman Brothers

The broker says that ITV (excluding ITV2) will see a decline of 3% in 2003 and 3.5% growth in 2004, for the twelve months to September (Carlton and Granada’s financial year). ITV advertising has continued to underperform the market, although the ‘dark days’ of the summer appear to be over, says Lehman’s report.

Analysts warn that these forecasts may be too bullish on ITV given fairly slack October-December trends, but the picture may become clearer following the release of Carlton and Granada’s financial results next week.

ITV Advertising Forecasts (£m)
	Q1	Q2	Q3	Q4	FY (to September)
2002A	443.6	387.6	429.1	413.2	1,673.5
Change (%)	-12.8	-13.8	1.4	11.7	-4.5
2003	469.4	366.9	404.6	367.5	1,608.4
Change (%)	5.8	-5.3	-5.7	-11.1	-3.9
2004	464.7	385.2	424.8	389.6	1,664.3
Change (%)	-1.0	5.0	5.0	6.0	3.5
Source: Lehman Brothers, November 2003

The broker has also produced a model of potential growth for ITV’s advertising revenues in 2004. This is based on the growth of the TV market as a whole and the changing share of the market taken by ITV.

If, for example, the market grows by 2% in the twelve months to September 2004 and ITV’s share of TV revenue comes in at 50%, the Network will take £1.58 billion, or 2% lower than the previous year. This is represented in the table below.

TV Advertising Market Growth Forecasts Year To Sep 2004 (£m)
	Market growth	0%	1%	2%	3%	4%	5%	6%	7%	8%
	Market value (£m)	3,092	3,123	3,154	3,185	3,216	3,247	3,278	3,308	3,339
ITV’s market share	54%	1,670	1,686	1,703	1,720	1,736	1,753	1,770	1,787	1,803
	53%	1,639	1,655	1,672	1,688	1,704	1,721	1,737	1,753	1,770
	52%	1,608	1,624	1,640	1,656	1,672	1,688	1,704	1,720	1,736
	51%	1,577	1,593	1,608	1,624	1,640	1,656	1,672	1,687	1,703
	50%	1,546	1,561	1,577	1,592	1,608	1,623	1,639	1,654	1,670
	49%	1,515	1,530	1,545	1,561	1,576	1,591	1,606	1,621	1,636
	48%	1,484	1,499	1,514	1,529	1,544	1,558	1,573	1,588	1,603
ITV Advertising Growth, Year To Sep 2004 (%)
ITV’s market share	54%	4	5	6	7	8	9	10	11	12
	53%	2	3	4	5	6	7	8	9	10
	52%	0	1	2	3	4	5	6	7	8
	51%	-2	-1	0	1	2	3	4	5	6
	50%	-4	-3	-2	-1	0	1	2	3	4
	49%	-6	-5	-4	-3	-2	-1	0	1	2
	48%	-8	-7	-6	-5	-4	-3	-2	-1	0
Source: Lehman Brothers, November 2003