Olympics to end ITV winning streak

By PETER RANSCOMBE
Published on 22/07/2012 00:00

A DECENT summer for ITV advertising income may come to an abrupt halt next month as viewers focus on the Olympics coverage on the BBC.

The sale of ad slots during Britain’s Got Talent and Euro 2012 helped revenues rise by around 6 per cent and 17 per cent in May and June respectively.

But some forecasters now suggest this will be followed by falls of up to 10 per cent in July and August.

Analysts had previously hoped that the Olympics would trigger a “summer of love” across the advertising market, including for ITV, but the UK’s economic gloom has put paid to that, triggering a drop in the company’s shares in recent weeks.

The City will get an indication about ITV’s expected advertising revenues over the Olympics when it updates the market in half-year results on Thursday.

Paul Richards, an analyst at Numis, said every 1 per cent movement in advertising revenues will wipe some £12 million from under­lying earnings.

Meanwhile, the group is expected to report a strong performance for the first half of 2012, when overall advertising revenues rose 3 per cent.

The City expects pre-tax profits to rise 3 per cent to £211m, helped by an improved performance at its ITV Studios division, which is being revived with productions such as morning show Daybreak and Hell’s Kitchen In The US.

This is part of a turnaround strategy designed to make ITV less reliant on advertising revenues, which are volatile and dependent on the economy.

Patrick Yau, an analyst at Peel Hunt, agreed that “forward advertising trends will, as always, be key” in the interim results, warning the full-year earnings-per-share forecast could be at risk.