Shares in Granada Media tumbled today after a “significant” downgrade by Merrill Lynch wiped 21% from its 2001 profit forecast. Prices slipped almost 9% as the bank highlighted ITV advertising softness, “conservative accounting” for the United TV assets and additional digital new media costs as contributing factors in its decision. Carlton Communications prices fell by 5%.
ITV advertising is forecast to be down 17% in October and to fall a further 3% in November, according to the report. Despite last week’s decision to restore News at Ten and the additional 2.5 minutes of peak-time advertising the deal brought (see News At Ten To Return To ITV), the investment bank is reducing its ITV ad revenue growth forecast for 2001 from 4% to 3% due to declining audience share and likely pressure on CPT rates.
ITV’s revenue fell by 5.8% during August and CPTs rose year on year across all categories (see TV Market Round-Up – August 2000).
Profit before tax during 2001 is now estimated to reach £256m, compared to the earlier forecast of £321m, and the bank estimate a loss of £62m worth of advertising revenue during 2000.
The absence of ITV in Sky Digital homes also contributed to the downgrade; ITV is losing audience share in these homes as the network is still not carried on the Sky Digital platform or prominent on the Electronic Programme Guide (see ITV Slips While Non-Terrestrials Improve In Digital Television Homes).
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