Sales increase by 11pc but ITV expects ad revenue growth to slow
BRITISH broadcaster ITV is cautious about the outlook for 2011 and expects advertising revenue growth to slow to 10pc this quarter, after a 16pc rebound last quarter helped by the World Cup.
The UK's biggest commercial free-to-air TV broadcaster said yesterday total sales rose 11pc to £1.46bn (€1.71bn) in the first nine months of the year, driven by a strong advertising recovery from a low 2009 base.
ITV, which under new chief executive Adam Crozier plans to enter the pay-TV market to reduce its overwhelming dependence on volatile advertising revenue, made no mention of the possibility of reinstating a dividend, as some had expected.
"The television advertising market has continued to recover strongly. However, this does not disguise the challenges ITV faces," Mr Crozier said.
"The economic outlook for 2011 is uncertain and we continue to plan on a cautious basis."
ITV's audience share of commercial impacts (SOCI), which excludes the state-owned BBC, fell 1pc to 39.3pc in the year to November 6 despite hit shows including 'The X Factor' and 'Coronation Street'.
Flagship channel ITV1's SOCI fell 5pc to 26.8pc, but the group compensated to a large extent with its other, digital channels, which include Men and Motors and GMTV.
ITV shares fell more than 4pc in early trading and continued its downward spiral for the rest of the day, closing off 5.6pc.
Analysts said the third-quarter result was stronger than they had expected and that the caution on 2011 was healthy. UBS lifted its target to 84p from 72p and kept its 'buy' recommendation.
Numis analysts wrote: "The cyclical rebound in television advertising reinforces our view that although free-to-air television is wickedly cyclical, it is structurally robust."
Scottish broadcast and media group STV has also signalled a strong end to the year.
ITV shares have risen 36pc this year, outperforming the European media index by 27pc, thanks to the company's high gearing to the wider economic recovery. (Reuters)