UPDATE 1-STV says ad mkt improves but earnings take a hit

* Will not deliver further episodes of "Taggart" in 2009

* Earnings reduced by 2 mln stg

* Continued stability and improvement in the second half

* Visibility remains low, maintains a cautious approach (Adds details)

Nov 6 (Reuters) - STV Group (STVG.L) said airtime revenue to the year end continued to improve but 2009 earnings would take a hit as the Scottish media firm would not deliver further episodes of the popular drama "Taggart" this year.

The company, which has produced a wide range of programmes for a variety of networks, said ITV (ITV.L) had not yet confirmed a re-commission of "Taggart", resulting in a reduction of about 2 million pounds ($3.32 million) in earnings.

In case ITV does not re-commission "Taggart", STV will make further episodes for delivery in 2010, the company said.

STV, which is locked in a legal battle with ITV, Britain's biggest commercial free-to-air broadcaster, over a funding dispute, said it would submit a robust defence, which included claims against ITV for 35 million pounds gross that is owed to STV. [ID:nLN143738]

STV said there had been a continued stabilisation and improvement across the market during the third and the fourth quarter.