The company has reported a 1% fall in annual profit to £312m ($515m), a result in line with analysts expectations.

Three out of its four divisions increased earnings but overall net profit for the year to September slipped due to a £28m investment in its new ONdigital joint-venture digital terrestrial TV service with Granada.

Carlton says ONdigital, which launched on 15 November, is now a fully-fledged business with over 300 employees and received over 250,000 inquiries in the first week of broadcasting.

The company says that its digital TV technology is now established and working well - the next stage is to market ONdigital to the widest possible audience.

Carlton's digital future

Carlton chairman Michael Green said: "With ONdigital, we have converted last year's licence application into a new business which has launched into the fast growing pay television market. Early indications are of strong demand from the public."

He said the company "will continue to examine the potential for expanding further in media and screen-based entertainment as well as growing our existing businesses and investing in digital."

The company paid £216 million for its share of the ITV schedule in 1998, £10m more than the previous year; but it says greater investment brought ITV larger audiences, particularly via sport.

TV advertising revenue grew by almost 9%, with stronger growth in the second half of the year.

Carlton says its production division made 1,700 hours of programmes during the year, including programmes for ITV, for Carlton's own digital channels, for Channel 4 and for the BBC.

It also sells its a number of its dramas, such as Inspector Morse and Goodnight Mister Tom, abroad. In its film and video divisions, turnover and profit grew healthily.