Trouble ahead for ITV, says top bank

ITV has been on the end of a double blow after Merrill Lynch forecasted a gloomy scenario for the future of the broadcaster’s advertising revenues.
Two reports by the stock broker suggested that ITV would be hit by a short-term fall in impacts – the number of people who see an advert – and a long term threat from the rise of the personal video recorder.

Merrill Lynch announced it had downgraded its verdict on ITV shares – no longer recommending them as a buy and rerating them under the term neutral – as it claims that flagship channel ITV1 will end the year more than 5% down in its share of impacts, despite a fight back in the ratings since September.

Under the terms of the contract rights renewal process, this would entitle agencies to move more than £100m out of ITV and into other broadcasters.

In a separate report, entitled The Rise of the Machines , Merrill Lynch claims ITV will be the worst hit of all European broadcasters by the anticipated take up of the PVR, because of the aggressive push by BSkyB behind its machine, Sky+.
Although Merrill Lynch claims the impact will not be truly felt for a couple of years, the reports predict PVRs will wipe out 25% of advertising in homes that take up the technology – which are predicted to amount to 2.5 million among Sky subscribers alone by 2010.

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