Broadcasters see sales fall

European broadcasters ITV and ProSiebenSat.1 reported lower first-quarter revenues as advertising spending slumped.

Britain's ITV, struggling to meet expensive public-service programming obligations in what it has called the worst market conditions in 30 years, said it expected a decline in net advertising revenue (NAR) to accelerate to 18 percent in June.

Overall, the decline in first-half NAR will be 16 percent, larger than the first quarter's 15 percent fall, ITV said. It targeted an extra £40 million in cost cuts by 2010, some from further cuts to its programming budget.

Germany-based European broadcaster ProSieben declined to give an outlook after first-quarter adjusted sales fell 8.8 percent, but its recurring core profit unexpectedly rose by 6 percent on cost efficiencies.

By 11:15 a.m., ITV shares were down 3.85 percent to 31.045 pence, off an earlier low of 30 pence, while ProSieben shares rose 11.07 percent to €3.31 against a flat European media index.

In a note on ProSieben, DZ Bank analyst Christoph Bast wrote: "On an operating level, profit developed... surprisingly strongly and came in above our and market expectations."

Brokerage Numis upgraded ITV to "add" from "hold" on its recent poor price performance - the shares are down 18 percent this year so far. "ITV remains our preferred 'death or glory' recovery play," its analysts wrote.

Neither ITV nor ProSieben gave a full-year forecast.

"Because market visibility remains poor, more detailed projections for fiscal 2009 as a whole will not be possible in the near future," ProSieben said in a statement.

ITV Executive Chairman Michael Grade, due to step down by the end of the year, said: "The television advertising market remains weak. However ITV continues to outperform the market."

Executives told analysts on a conference call ITV had appointed advisers to sell its Friends Reunited web site and SDN digital multiplex business, and that interest in Friends United was "encouraging," while the SDN process was less advanced.

The television industry has been hit hard by deep cuts to corporate advertising budgets coupled with an explosion in the number of competing digital channels.

France's top commercial broadcaster TF1 cut its 2009 sales outlook Wednesday as depressed ad markets pushed it to a first-quarter operating loss and also vowed to cut costs further.

ACCELERATING DECLINE

ITV said NAR fell 16 percent in April, was forecast to do the same again in May, and would fall 18 percent in June, giving an overall first-half decline of 16 percent. Its first-quarter revenues fell 14 percent to £425 million.

ITV held its audience share at 23.4 percent due to the popularity of such entertainment shows as "Britain's Got Talent," which recently discovered surprise international singing sensation Susan Boyle.

ProSieben said it had finally fixed its unpopular German advertising sales model and as a result had increased its gross TV advertising market share by more than 3 percentage points to 43.6 percent.

Its first-quarter revenues of €627 million were shy of the average forecast of €635 million (NZ$1.45 billion) in a Reuters poll of 10 analysts.

However, recurring earnings before interest, taxes, depreciation and amortisation (EBITDA) of €93.8 million easily beat the average forecast of 84 million.

Net debt rose 3.1 percent during the quarter to €3.512 billion by the end of March, 5.2 times recurring EBITDA.

ITV said its family of channels had a 40.2 percent share of commercial impacts in the first quarter, down from 41.4 percent a year ago.

ITV said in March that current advertising conditions were the worst in decades. It dumped mid-term targets, wrote down its broadcasting and online assets £by 2.7 billion, suspended its dividend and said it would cut an extra 600 jobs.

- Reuters