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EDITIONS
Tuesday, 26 November, 2002, 17:23 GMT
Carlton raises advertising hopes
UK broadcaster Carlton Communications has raised hopes that the slump in TV advertising revenues is over, after it said a recent pick-up in spending was expected to continue into its new financial year.

Reporting results for the year to 30 September, Carlton said advertising revenue for the second half rose 2% from the same period in 2001.

A similar gain in spending was forecast for the final three months of 2002.

Carlton posted a total pre-tax loss of 156m ($245m) for the year, due in part to the failure of operations such as ITV Digital, and an overall fall in advertising revenue.

However, the figure was better than the previous year's loss of 410m, and, stripping out parts of the business which have been closed, Carlton's pre-tax profit rose to 53.3m from 30.2m last year.

Last month Carlton agreed a 2.6bn merger deal with the other main ITV broadcaster Granada.

'Challenging' advertising market

The firm has made cost savings of 54m over the past year, helped by cutting 320 jobs and by closing ITV Digital.

The savings have helped to offset the fall in advertising revenues, which despite growing during the second half of the year, fell for the year as a whole by 6%.

But chief executive Gerry Murphy said he was "cautiously optimistic" about the prospects to advertising income.

"It is difficult in this industry at the moment and particularly difficult to forecast any long-term trend," he said.

"But we are heartened and even reassured by the fact that after a couple of periods of double digit decline we've seen growth in the past half year of a couple of percent and into the first quarter of this year."

The news lifted Carlton's shares, and they eventually closed up 11 pence, or 8.2%, at 145p.

Shares in Granada, which also reports results this week, rose 2p, or 2.4%, to 85p.

Merger progress

Carlton said that it and Granada had put forward a detailed submission to the Office of Fair Trading (OFT) over its proposed merger.

Meanwhile the two firms were looking at cost savings in areas which are not likely to come under the focus of the regulator, such as transmission, purchasing and some support services.

The two firms want to merge their media sales house - which sell airtime on ITV - but it is thought this may not be allowed by the competition authorities.

Finance director Paul Murray said he expected the OFT to decide whether to refer the deal to the Competition Commission in about six weeks' time.


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