UTV plans to set up new TV station in the Republic
UTV bosses have given a public vote of confidence in the recovery of the Irish advertising market and economy at large by announcing plans for a new television station in the Republic.
Analysts broadly welcomed the decision, which will see new channel UTV Ireland going head to head with RTE and TV3 for market share when it launches in early 2015.
"You can take the view that there's going to be an eternal decline in advertising – and it's admittedly a very fragile market – but ultimately the Irish economy will recover and we want to be in a position to take advantage of that," said UTV's group chief executive John McCann.
The decision to significantly expand the company's presence in the Republic comes despite the fact that revenues from its Irish activities fell markedly last year. Television advertising revenues in the Republic declined by 12pc in comparison to 2011, while Irish radio advertising declined by 6pc.
In its full-year annual report, UTV called conditions in the Irish market "tough".
But analysts said yesterday that its better performance in Northern Ireland was still encouraging.
"The group's performance in the Northern Ireland television market highlights the group's track record of creating a market-leading offering based around strong local content and good-quality ITV prime-time programming," said Goodbody Stockbrokers.
The company's new Irish channel has secured the exclusive rights to broadcast ITV programming in the Republic from 2015, including popular shows like 'Coronation Street' and 'Emmerdale'. This licence is currently held by TV3.
Goodbody Stockbrokers drew attention to 2012 revenues at TV3, whose flagship channel and subsidiary channel 3e generated €58m last year.
"This revenue performance highlights that there is significant advertising revenue potential for an established channel of this nature in the Republic," said analyst Gavin Kelleher.
UTV, whose flagship northern station is already available in the Republic, also owns radio stations in Ireland and the UK, including Cork's 96FM and two of Dublin's biggest, FM104 and Q102.
It also owns the world's biggest sport radio station, talkSPORT.
In total, the group took in revenues of £120.1m (€143m) in its last financial year, down 1pc from 2011, while pre-tax profits fell 10pc to £23.3m.
It is currently implementing a cost-cutting programme at its Northern Irish division. It emerged last week that four camera operators and video editors face redundancy in UTV in Belfast.
Managing director Michael Wilson told the Irish Independent yesterday that two of these redundancies were voluntary and all had been taken in order to prepare for the new Irish launch.
He added that other video editor hires elsewhere in the company meant that there had been no net reduction in staff numbers.
The company has managed to reduce its net debt position by 54pc since December 2008 to £49.4m.