UTV Ireland losses to top €18m following fourth profit warning
UTV Media warned yesterday that losses at its fledgling Irish station are set to top €18m by the end of 2015, a development that analysts called "disappointing".
The announcement was the fourth profit warning given for UTV Ireland so far this year and was a revision upward from the company's prediction made at the end of June that it would make a full-year loss of £11.5m
Last month the UTV Media announced that it had agreed to sell the station to ITV as part of a £100m deal.
The deal is part of an acquisition of all of UTV Media's television stations, including its Northern Irish channel. It is contingent on the approval of regulators and shareholders.
In a trading update issued yesterday, the company said the "uncertainty created by the speculation around these discussions and the time to completion of the agreement" has had, and is continuing to have, a negative impact on the station. UTV Ireland said as a result it expects the full-year loss for 2015 to be "approximately £13m (€18.2m).
The profit warning is its fourth of the year. When it announced plans for UTV Ireland in November 2013, UTV said the station would break even by the end of its first year on air.
Before its January launch, it was expected to lose £3m by the end of 2015, mostly related to startup costs. In March the loss estimate increased to £6m before rising further to £8.5m in May and then £11.5m at the end of June. When asked when the station may now break even, a spokeswoman for UTV Media said: "UTV is in a sale process with ITV and could not speculate on when it [UTV Ireland] may break even."
Davy Stockbrokers analyst Robert Stokes had previously forecast UTV Ireland would start making money in 2018.
However, he said that it is now difficult to gauge when the station may become profitable due to the deal with ITV.
"While disappointing, the deal with ITV will still go ahead. [The reason] for the increased loss is pretty plausible, there will be advertiser uncertainty because of the deal," he said.
Mr Stokes added that putting a timeline on when when UTV Ireland will break even is "off the radar for now because it will be under a different parent company and have different operations".
He said that there will be a better indication of ITV's plans for the station when the company issues a circular to shareholders which is expected in the coming weeks.
UTV Ireland declined to comment when contacted by the Irish Independent. A spokesman for ITV said that the firm intends "to strengthen the channel [UTV Ireland] further with high quality ITV programming at its core."
UTV Ireland has struggled to gain traction with both viewers and advertisers.
So far revenue has fallen below expectations in its first six months due to a slower than predicted build in audience numbers. It posted an operating loss of €10.2m for the period.
When the deal with ITV completes, the remainder of the UTV group will essentially be a radio business. The company owns several Irish radio stations including FM104 and Q102.