Merrill Lynch has adjusted its 1998 forecast for United News & Media due to ‘lower underlying performance’. The brokers has also adjusted its 1999 forecast to reflect a more conservative assumption regarding the reduction in ITV license payments that United is likely to obtain starting in 1999. The previously assumed reduction of £44m has been replaced with the more ‘conservative’ reduction forecast of £32m. Lower profits from national newspapers are also are cited as a reason for the adjustment.
The 1998 and 1999 forecasts have been reduced by 3% and 4.3% respectively. However, the report does not take into account money which may be accrued from the likely sale of regional newspapers UPN and the Spanish subsidiary, Segundamano; Merrill Lynch estimates that these could sell for around £400m.
ITV’s advertising revenue is predicted to stay ‘broadly flat’ for 1997, although subsidiaries Meridian, Anglia and HTV are expected to have performed slightly better than the ITV average. The brokers predicts a ‘difficult’ year ahead for ITV with ad revenue growing less than 1%. Nevertheless it reiterates its rating of Accumulate for United.
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