Analysts at ABN AMRO have reacted to January and February advertising revenue figures by downgrading its forecasts for the ITV companies for the calendar year, from the previous figure of 3% growth to 1.3% shrinkage. This means that the earning forecast for Granada has been reduced by 14%, Carlton by 9.9% and SMG by 1.4%.
After a solid December, January’s revenues fell by an estimated 10.3%, while February is expected to show a further 8% fall. After a 3.5% fall during Q4 of 2000, the outlook for the first two quarters of this year appears to be poor, with an assumed fall of 5.5% in March adding up to an expected 8.1% fall for Q1. Strong comparators are giving Q2 a poor outlook, and revenues for this period are expected to drop by 9%.
The news for the ITV companies is not all bad, however, as recovery is assumed to be on the way during the second half of the year, with growth restored to normal. It is hoped that positive growth will be reported for the first time in July, showing that a recovery is on the way.
In terms of share prices, ABN points out that this is the third time that a round of downgrades have hit the ITV companies, and that each time the impact on shares is less. “We believe this is an indication that the market is now discounting bad news and sentiment may turn sharply when earnings estimates have bottomed out,” the analysts stated in their note today.
At 11:20am today, shares in Granada had fallen ¼p to £1.73½ from yesterday’s closing price (see Sharewatch), Carlton had added 9p to £5.04 and SMG remained at £2.56.
ABN AMRO: 020 7678 0281 Carlton: 020 7663 6363 www.carltonplc.co.uk Granada: 020 7620 1620 www.granadamedia.com SMG: 0141 300 3000
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