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Last Updated: Wednesday, 29 June, 2005, 16:08 GMT 17:08 UK
ITV shares up on licence fee cut
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ITV could lose advertising revenue as more homes switch to digital TV
Shares in ITV have risen on news that media regulator Ofcom has cut its broadcast licence fee to 80m for 2005 from 215m last year.

The falling cost of the broadcast licence fee reflects the fall in demand for analogue rights, as the growth of digital services continues apace.

The decision should free up 1bn for programme making, ITV said.

Shares in ITV plc, created from the merger of Granada and Carlton, closed up 6.5p, or 5.6%, at 122.5 pence.

The government plans to switch off the analogue system in 2012, by which time ITV's fee will have fallen to 4m a year, in line with a likely fall in advertising revenues.

"As homes continue to migrate from analogue to digital, the share of advertising derived as a result of access to the analogue spectrum will continue to decline and the proportion of advertising revenue earned by analogue channels overall is likely to fall," Ofcom said.

Channel 5 will also benefit from a licence fee cut, with its fee falling from 15m in 2004 to about 10m.

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