STV forecast predicts ad market downturn

Scottish ITV licence holder STV has given a gloomy forecast for the TV advertising market this summer, forecasting that it will be down 7% in May due to the lack of a major sporting tournament.

In a statement published yesterday, the broadcaster said that it has made a "positive start" to 2011, with performance growing in line with expectations for the current financial year.

STV said that the airtime market has continued to improve over the first quarter of this year, with revenues up 9% year-on-year. The broadcaster's national TV airtime revenues were up 11%, but it said the regional market continues to lag behind, down 10% year-on-year.

STV expects the TV ad market to be up 7% year-on-year in April, largely due to the consumer boom around next week's royal wedding.

However, the market is predicted to fall 7% in May, "reflecting the pre-World Cup effect on May last year". The regional market is expected to be down 19% in April and down a further 10% in May.

The forecast marks the first time that a UK commercial broadcaster has publically predicted a downturn in the TV advertising market. As STV is part of the ITV Network, its predications are usually a fair indicator of the overall performance of ITV plc.

"We have delivered a strong start overall to 2011 and there is real momentum throughout our business as we continue to achieve revenue growth across all platforms," said Richard Findlay, the STV chairman.

"We remain confident of our ability to continue to create enhanced shareholder value and deliver against the challenging KPI targets we have set out."

Rob Woodward, the STV chief executive, added: "We are continuing to deliver growth and develop new consumer services and progress our digital strategy.

"While the advertising market remains short-term in outlook, we are creating new opportunities to grow advertising revenues and increase our market share. Overall, we are successfully building a reputation as an innovative, solutions-driven digital business."

STV also said that there is "no update" on the status of its long-running legal battle with ITV over alleged unpaid network budget contributions, along with airtime sales debts and unfair exploitation of video on-demand rights.