ITV 'to report big ad revenue decline'

ITV is expected to announce the first fall in its advertising revenue for 18 months on Wednesday, as the broadcaster's extended period of growth comes to an end.

Adam Crozier, who joined as ITV chief executive in April last year, recently reported that the broadcaster had tripled its pre-tax profits in 2010 to £321 million on the back of a market-beating 16% year-on-year surge in its TV ad revenue.

The resulting recovery in ITV's share price helped the company return to the FTSE 100 this spring, after it dropped out in 2008 on the back of losses of around £2.7bn.

ITV is expected to announce on Wednesday that its first quarter TV advertising revenue was up around 12% year-on-year, with April up about 6%, reports The Guardian.

However, May is likely to be down 7%, the first fall in ITV's ad revenue since November 2009, while June could be down by as much as 20%.

The forecast also reflects recent predications from ITV licence holder STV, which expects the TV ad market to be up 7% year-on-year in April, but fall by 7% in May, "reflecting the pre-World Cup effect on May last year".

ITV's share price has already fallen 25% to 72p on the back of speculation of a tough summer ahead, but analysts believe that the 2010 World Cup surge was always going to be tough to follow.

UBS analyst Tamsin Garrity said: "What did anyone expect after TV advertising last June leapt more than 40% during the World Cup, an amazing feat by the sales team?"

Garrity added that there are a number of indicators to suggest ITV's stock remains good value, including the broadcaster's improved financial position, potential forthcoming removal of advertising regulations on ITV1 and next year's London Olympics.

ITV is also expected to see a recovery in ad revenue from September, when it will have exclusive UK rights to the Rugby World Cup in New Zealand.