ITV’s ad recovery stalls

ITV is expected to post advertising growth of around 6% in April, down from the 12% previously predicted, according to Merrill Lynch.

Following a stronger than expected start to the year, with Q1 ad growth of c12%, the broadcaster’s advertising recovery seems to have deteriorated in Q2.

Merrill Lynch forecasts ITV results of -7% in May (vs -4%), -20% in June (vs -10%) and -10% in July.

Drinks, auto and retail have been areas of weakness for ITV. “We believe regional advertising (c15% of revenues) has also been a drag on growth,” Merrill Lynch said.

The Rugby World Cup is expected to boost ITV’s ad revenues in September and October, though this will be limited due to the time difference.

As a result, Merrill Lynch has cut its 2011 TV market growth from 3.2% to 1.4%; ITV1 ad growth from 2.4% to -0.1%; and ITV family growth from 3.3% to 0.9%.

ITV’s share price is likely to be affected by the downgrade in the coming weeks and “weak ad momentum over the summer months”.

“Furthermore, the slowdown is likely to shift focus back to longer term structural pressures with upside increasingly contingent on management’s ability to deliver on its turnaround strategy.”

ITV’s CEO Adam Crozier detailed his five year plan for the commercial broadcaster at MediaTel Group’s TV Summit in November.