LONDON (Reuters) - ITV, Britain's largest free-to-air commercial broadcaster, said it expected demand for advertising to bounce back strongly this summer after it suffered from having no Olympics coverage a year ago.
Chief Executive Adam Crozier said his talks with advertisers indicated that they were becoming more confident about spending.
"While that sentiment has shifted I don't think that has quite yet turned into actual behaviour," he said. "But I think it would be fair to say the fear of the downside seems to have largely diluted and people are now looking more positively."
The company posted a better-than-expected 16 percent rise in first-half profit, year-on-year, as its production business offset weaker ad demand.
Income from advertising across its channels, which feature shows such as "Coronation Street" and "Broadchurch", fell by an expected 3 percent in the half, the broadcaster said, but was coming back strongly.
It was expected to rise 12 percent in July, 20 percent in August and to be flat in September, compared with the same months in 2012, which would produce a broadly flat first nine months of the year, ITV said, sending shares to a 12-year high.
Crozier said last year advertising was affected by the coverage of major sporting events. ITV showed the Euro 2012 soccer tournament last June, but had no coverage of the London Olympics in July and August.
"This year is a mirror issue of last year," he said. "Last year because of the Euros and the Olympics people brought advertising out of July and August into June, and this year it shifted back the other way."
He said telecoms group BT was stepping up promotion around the launch of its sports channel, while its competitor pay-TV company BSkyB was also increasing advertising. Supermarkets, carmakers and the government were also spending more, he said.
ITV has been building its production business, both by making more programmes for its own channels and other broadcasters, and by acquisitions in Britain and abroad.
Revenues in its production arm, which makes dramas such as "Mr Selfridge" and "The Psychopath Next Door", rose 11 percent to 395 million pounds, out of a overall company total of 1.3 billion pounds, while earnings from the unit increased 26 percent to 63 million pounds.
Shares in ITV rose to a new 12-year high of 166.5 pence in early trading. They were trading up 4 percent at 163.5 pence by 1036 GMT, the second-highest riser in the FTSE 100 index.
Analysts at Numis said the results were slightly ahead of its forecasts, and it raised its outlook for full-year ad revenue from flat to 1.5 percent and its pretax profit forecast to around 530 million pounds ($814 million) from 515 million pounds.
"We remain firm supporters of ITV, which is executing well on rebalancing the group by deploying cash flow into building (its production business) ITV Studios, while we view it as a natural play on UK macro recovery," they said.
Crozier shrugged off the impact of the merger between major ads groups Publicis and Omnicom on ITV, announced at the weekend.
"The media buying side is pretty consolidated anyway," he said. "We are perfectly capable given our of scale of handling ourselves in that market."
ITV reported first-half adjusted pretax profit of 270 million pounds, up 16 percent, on revenue up 2 percent to 1.3 billion pounds.
Analysts at Citi were expecting ITV to report revenues of 1.13 billion pounds and adjusted pretax profit of 256 million pounds, against consensus of 1.11 billion pounds and 263 million pounds.
(Editing by Sarah Young and Pravin Char)