Carlton sends mixed signals on ad revenue

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Carlton heralded a bounce-back in advertising in the second half of the year yesterday but admitted it could not say whether advertising revenues would be in positive territory in 2003.

Carlton heralded a bounce-back in advertising in the second half of the year yesterday but admitted it could not say whether advertising revenues would be in positive territory in 2003.

The company, which is putting together a merger deal with Granada, the other main ITV player, reported that advertising was up 2 per cent in the second half, compared with a 13 per cent fall in the first six months of the year. Overall, like-for-like net advertising revenue was 6 per cent lower for the year ended 30 September.

For the October to December quarter, sales are also running 2 per cent up on last year. However, the buying round to book advertising for 2003 is now under way and some analysts have predicted that, given the ratings declines that ITV programmes have seen, advertising revenues will suffer in 2003. There are forecasts that 2003 advertising sales will be down 2 per cent on the poor 2002 figures, although other analysts have predicted a slight gain for 2003.

Gerry Murphy, the chief executive who is soon to depart to take the top job at Kingfisher, said that ITV was "getting its momentum back". However, he could not say whether the advertising revenue growth would continue into 2003.

"It depends on the performance of the economy, of television and of ITV within that. All these are moving parts. I'm not going to be brave enough to give you a forecast [for 2003]," Mr Murphy said.

Carlton reported a bottom-line loss for the 2002 financial year of £156m, principally due to losses sustained on the defunct ITV Digital venture, though this was an improvement on the £390m loss for the previous year. Operating profit on continuing operations, before amortisation, interest and exceptional items, was flat at £65.3m.

There was some surprise at the final dividend, which was maintained at 5p, to give an 8.275p dividend for the full year. That will give Carlton's chairman, Michael Green and his family, owners of 8 million shares, a £662,000 payout.

Kingsley Wilson, an analyst at Investec Securities, said: "This [dividend] is not cash covered on our numbers but reflects the confidence of both an improvement in trading and the merger with Granada. Were Carlton to remain stand alone we believe the dividend would have been cut."

Carlton said a detailed merger plan had been submitted to the Office of Fair Trading. "We will be urging our regulators to look at the wider competitive landscape [within the television sector] when considering our proposals," the company said.

Carlton's shares yesterday rose 8 per cent to 145p.

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