City guilty of 'over-reacting' to Granada sales warning

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The Independent Online

Two of the country's top advertising executives have claimed the City over-reacted to last week's warning by Granada Media that advertising revenues in the first half of next year would fall below this year's levels.

Two of the country's top advertising executives have claimed the City over-reacted to last week's warning by Granada Media that advertising revenues in the first half of next year would fall below this year's levels.

Granada's shock announcement last Wednesday sent the group's market value crashing by almost 23 per cent to a low of 438p. It later recovered slightly to end the week at 451p. Meanwhile Carlton Communications, Granada's chief ITV rival, also took a hammering, hitting a year low of 528p at Friday's close. United News & Media, which is selling its ITV assets to Granada, finished the week 14.5p lower at 729.5p.

Ray Kelly, regional chief executive of Carat, Europe's biggest media and planning agency, described the reaction to Granada's statement as "somewhat hysterical". He said: "I think [the company] is in a pretty strong position for next year and beyond ... Frankly, I'd be buying shares at the moment if I could get hold of my stockbroker."

Jim Marshall, chief executive of the media planning and buying group MediaVest UK, backed up Granada's claims that the fall-off at the start of 2001 was largely "a timing issue" due to the absence in the period of set-piece events such as the Euro 2000 football championship.

Mr Marshall said: "To be honest, advertising revenue tends to be quite erratic in terms of peaks and troughs. But over the longer term, it is pretty consistent."

Total turnover from television advertising in the UK is forecast to rise by about 6.5 per cent to $5.37bn (£3.64bn) next year, according to the latest industry report by PricewaterhouseCoopers. But much of this expansion is likely to benefit the growing army of satellite and digital channels, which are stealing both audience and revenue share from ITV.

In particular, industry experts warn that the terrestrial station risks becoming less attractive to younger viewers, who are more likely to be drawn to focused offerings such as MTV, the music channel, and Sky One, whose schedules are dominated by cult programmes such as Friends, The Simpsons and Star Trek. Mr Marshall says: "The problem is that younger viewers are what advertisers are looking for."

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