LONDON (Reuters) - British broadcaster ITV (ITV.L) forecast a sharper than expected drop in advertising revenue in the current quarter, overshadowing a strong start to the year for the home of the Downton Abbey drama.
ITV, which has rebuilt itself in recent years by selling programmes to international markets and growing its online business, said its recent weak viewing figures had also continued.
Net advertising revenue (NAR) was up 12 percent in the first three months of the year, ahead of the 11 percent it had previously forecast.
However, the group said it now expected net advertising revenue to come in just 5 percent higher for the first half of the year as a whole.
That implied a rise of 5 percent in April and a forecast drop of 5 percent in May and a fall of between 5-7 percent in June due to strong comparative figures in the previous year.
“Expectations had risen going into the first quarter release with ad buyers talking of a TV ad market up 4 percent in the second quarter,” Citi analysts said in a note.
“In light of that, while we expect no change to consensus forecasts, ... we believe that the first quarter trading update could be seen as slightly disappointing.”
The trading update coincided with a 24-hour strike by some ITV staff who are angered at the 2 percent pay rise they have been awarded, despite the improvement in the company’s fortunes.
The network’s recent share of viewing also remained weak, down 3 percent in the first four months but the group flagged new programmes which had been well received, such as reality show Britain’s Got Talent and drama Code of a Killer.
It should also enjoy a lift from the Rugby World Cup which kicks off in September and which ITV will show exclusively.
“Our digital channels are growing audience share, up 3 percent overall year on year, and we are firmly focussed on the main channel where we expect to see improvement in the second half of the year,” it said.
Shares in the group were down 1.6 percent by 0810 GMT, following a 21 percent rise in the stock in the year to date.
“Even though this (trading update) may have precipitated some early profit taking today, the outlook remains bright with the market consensus of the shares as a buy unlikely to be disturbed,” said Richard Hunter, Head of Equities at Hargreaves Lansdown Stockbrokers.
Reporting by Kate Holton; Editing by Keith Weir