STV tipped to enjoy recovery in advertising

Analysts anticipate its fortunes will follow those of ITV, which this month showed an improved financial performance. Television advertising revenues at ITV, under the stewardship of Adam Crozier, rose 18 per cent in the first half to 728 million.

STV chief executive Rob Woodward is expected to benefit similarly from the broader recovery in television advertising. Growth has been in the double-digit region for the past eight months, and is expected to continue in that vein until November, when the previous year comparisons start to get tougher.

"We know how strong the first half has been because we have heard from ITV already," said Alan Howard, an analyst with Canaccord Adams. "It also looks like we are shaping up for a very strong third quarter as well."

Howard has pencilled in full-year revenues of 101m for STV, and pre-tax profits of 8.8m. However, he expects the interim figures could lead to an upward revision on those forecasts, particularly in terms of turnover.

Profits may not rise in line with any increase in revenues because STV has decided to bring forward some of its planned investments. This includes the launch of its HD technology, which began airing this year at an estimated annual cost of 1.8m.

Though he doesn't anticipate any official update on the legal battles between STV and ITV, Howard said he senses that relations may be thawing following Crozier's appointment as chief executive at ITV. Each group is suing the other for damages as a result of a fall-out over broadcasting rights.

"There is a new management in place at ITV, and my strong sense is that the context in which those disputes are taking place is far more favourable than they were previously," Howard said.