Poor Christmas showing hits Granada and Carlton shares

Carlton and Granada shares were punished yesterday as the City worried about weak advertising, depressed viewing figures and poor Christmas trading at ITV Digital.

It is understood ITV Digital put on only about 40,000 net subscribers, a rise of 3.3 per cent, in the fourth quarter of last year which includes the vital festive period. By contrast, it is estimated rival BSkyB added 139,000 net new customers.

Simon Baker, an analyst at SG, said: "ITV Digital is likely to miss the bounty of the traditionally buoyant Christmas season. While the successful 'Monkey' [advertising] campaign has no doubt increased branded awareness, we are still waiting to see tangible results."

If confirmed the ITV Digital figures, which are due to be published in the next couple of weeks, would see subscriber growth almost halve from the surprisingly healthy 6.1 per cent increase in customers recorded in the third quarter.

ITV sources said the business was now going after revenue per customer rather than simply seeking to acquire more subscribers at any cost.

Separately, viewing data from the British Audience Research Board (Barb) showed ratings for ITV fell 25 per cent in the first two weeks of 2002, compared with last year, although commercial channels as a whole were down 13.5 per cent. However, the Barb figures are based on a new method of measuring viewing and have been dogged by teething troubles that have caused chaos.

But advertisers take careful note of audience figures. The news sent Granada shares down 4.6 per cent at 129p, while Carlton lost 8.6 per cent to 224.75p.

Analysts at ABN Amro said: "Collapse in viewing could lead to loss of [advertising] share for TV.... We are currently forecasting a 4 per cent decline in ITV advertising for 2002 (with ITV down 15 per cent in the first quarter)."

However, ITV received a much-needed boost yesterday when Pace Micro Technology announced plans to launch a cut-price £100 set-top box in March. This has the potential to cut losses at ITV Digital.