There appears to be no improvement in ITV advertising levels on the horizon, according to Morgan Stanley analysts, with September looking unlikely to provide the previously-anticipated pick-up in trading.
At a broadcasting conference held by Morgan Stanley, a major UK media buyer told analysts that his firm sees no sign of recovery in September, with revenues set to be down by 5-6%.
A weak September is significant for ITV, because it receives a greater contribution to full-year revenue from the month, than from June or July. Indications are that June will be down by 18-20%, with falls of 8-10% in July and August.
Morgan Stanley had been expecting a decline of around 3% in the calendar Q3 (ITV’s Q4). Given this latest information, -3% seems too small a drop for the quarter, as it implies 6% growth in September. Analysts have reduced therefore their forecast to -7% accordingly; the changes bring the growth forecast for the year to September (ITV’s full-year) to -2.8%, down from -1.9% previously.
Calendar full-year forecasts have been reduced from -2.5% to -3.5% on the assumption that Q4 will be flat. Morgan Stanley says that based on the comments of industry experts, this assumption does not appear to be unduly conservative.
| ITV Advertising Growth Forecasts | ||
| Old | New | |
| Q1 2003A | 2.5 | 2.5 |
| Q2 2003A | -5.0 | -5.0 |
| Q3 2003 | -2.5 | -2.5 |
| Q4 2003 | -3.0 | -7.0 |
| Q1 2004 | 0.0 | 0.0 |
| Year to September 2003 | -1.9 | -2.8 |
| Calendar year 2003 | -2.5 | -3.5 |
| Source: Morgan Stanley, June 2003 | ||
By way of comparison, Merrill Lynch analysts have predicted a 2.5% fall in ITV’s revenue in the year to September, with declines of -20% and -10% in June and July (see Merrill Lynch Cuts ITV 2003 Airtime Revenue Forecasts).
