GMTV blames pounds 7m losses on Teletubbies

Four semi-literate creatures will force GMTV to report "significant losses" this year, according to forecasts from Merrill Lynch. The stockbroker blamed the BBC's Teletubbies show for depriving the ITV breakfast channel of advertising revenue as viewers switched over to watch the cuddly creatures' antics.

GMTV will rack up losses of pounds 7m in the year to the end of December, "following the severely adverse effect on viewership of the introduction of the Teletubbies on BBC 2", Merrill said.

The Teletubbies - four brightly coloured creatures named Tinky Winky, Dipsy, Laa-Laa and Po - have proved a huge hit with children and adults alike. Neil Blackley, media analyst at Merrill, said yesterday: "There's been a Teletubby bye-bye to GMTV advertising and profits." He added that GMTV's losses would reach an accumulated pounds 25m by the end of next year. This was partly because advertisers were reluctant to part with their money when some of the core audience of housewives and kids were switching to the BBC. The breakfast station also suffers from a very high licence fee, which compelled it to pay pounds 49m to the Treasury last year.

Mr Blackley said: "A substantial reduction in licence payments is expected to save the company in 1999." GMTV made a pounds 1m profit in 1995 - the first time it has entered the black since its inception in 1993. It made a small loss in 1996, and is now, according to Merrill, losing substantial amounts of money once again.