Digital television woes push Granada to £378m loss

Granada has been forced to take a £250m goodwill write-down on the value of its digital licences after deciding that the Government will miss its target date for switching off the analogue TV signal.

The figure, together with more than £200m of exceptional charges for the failed ITV Digital venture, saw the company crash to a bottom-line loss of £378m, for the year ended 30 September.

The Government has committed itself to turning off the analogue TV signal between 2006 and 2010. Granada, which is trying to merge with Carlton, the other main ITV player, said that "in light of the likely deferral of analogue switch off to 2014" it had to take an impairment charge of £250m against the goodwill on the balance sheet for its digital licences.

A spokeswoman for the Department of Culture, Media and Sport, said the Government was still sticking to a 2010 deadline, subject to "affordability and accessibility" criteria ­ that 95 per cent of homes have switched to digital by then and the digital signal covers 99.5 per cent of the country.

Charles Allen, Granada's executive chairman, said there was a reference to a 2014 switch-off in this month's Communications Bill, which the company had to take into account. He said the shift in date did mean a corresponding rise in the value of Granada's analogue licences but under the accounting rules, the company is not allowed to reflect this in the figures.

Mr Allen said: "It's a wee bit perverse.... They don't allow us to write back the [uplift in] value of the analogue licences. We looked at the Bill and, with our auditors, came to the conclusion that you can't support 2010 [for switch-off]. This is really a book-keeping issue."

Group operating profit for the period, for continuing operations before goodwill and exceptionals was £166m, down from £185m the previous year. Like-for-like net advertising revenue was down 12 per cent in the first half, but up 5 per cent in the second six months of the financial year.

Granada's full-year advertising performance saw sales down 4 per cent, a little better than Carlton's, which reported results on Tuesday. The better showing was put down to the return from Granada's Meridian and Anglia licences.

The three months since the year end has seen advertising sales running 2 per cent higher than 2001 but Mr Allen said it was impossible to predict 2003. "We do not have any visibility.... We are continuing our discussions with agencies and advertisers on contract renewals for January onwards, but it is too early to make any forecasts on revenue into 2003," he said.