ITV stands to lose a further &£70m of advertising revenue from its flagship ITV1 channel this year, on top of the &£140m already forecast, according to analysts.
Experts at Credit Suisse and Oriel Securities believe ITV1’s woes are set to continue after a disappointing summer. However, media agency executives are more optimistic, believing a strong autumn schedule and late advertiser bookings may help the beleaguered network.
Credit Suisse this week downgraded its forecast for ITV1’s year, from a 10% net advertising revenue reduction (NAR) to 15% less than in 2005. That further reduction is equivalent to an additional &£70m decline in ITV revenues, says the finance house. Other analysts previously predicted the channel’s full-year downturn to be between 10% and 12%.
It further predicts that the channel will be down 22% year on year during quarter three and as much as 20% in quarter four. A 29% drop is now forecast for July, worse than the original estimate of 23%. August’s fall is predicted to be 21% rather than 17%, and September is expected to be down 18% as opposed to the previous Credit Suisse forecast of minus 11%.
The bank’s report says: “Whilst we continue to believe that the UK television advertising market and ITV1 are labouring under a cyclical downturnâ¦[as the overall TV] market is forecast to decline by 7% in 2006, we question whether there are more serious structural forces being felt.”
Oriel Securities media analyst Redwan Admed believes ITV1 will be down 15% for the year. But Carat managing director Neil Jones believes the analyst forecasts are overly pessimistic and says the agency’s latest forecast is for ITV1’s advertising revenue to be down 7% at year end.