What a mess for ITV

ITV, the UKís largest commercial broadcaster, declares its results on Wednesday morning (August 6). Itís not likely to be good news for executive chairman Sir Michael Grade.

Declining audiences for flagship channel ITV1 and uncertainty over future advertising income, plus a massive 17.9% overhang of shares owned currently by BSkyB, have all combined to depress ITV share values to bargain basement prices.

Back in May, Sir Michael was able to suggest that the ITV group of channels was likely to outperform the UK ad-market generally. Since then there has been a marked slowdown in the UK economy affecting just about every layer of normally dependent ad-support. Numis Securities, in a note to clients, suggests ITV1 will see revenues fall eight per cent in the second half of this year. The consensus is that ITV will on Wednesday report a fall in profits from £127m to £85m.

UBS, one of ITVís house brokers issued a ĎSellí note to clients on Friday and gave 25p as the target value (ITVís shares stood at 42p on Friday, a 50% fall since February), which is not good news for the broadcaster. UBS also predicted a September slump in advertising thatís ďsharplyĒ down.

The expectation is that Grade will cut ITVís interim dividend, and report a further tightening of the belts at ITV with job losses not ruled out.

Meanwhile in the wings the wolves and bottom feeders are waiting to move in. There has not been much progress on the widespread reports that Endemol, Mediaset and RTL are lining up bids. Nor is there news from the UKís Appeal Court on whatís to happen to BSkyBís 17.9% holding, now a fraction of their original value at these current rates. ITVís market capitalisation is now a mere £1.6bn Ė but potential buyers might well be asking themselves why not simply wait another month or two for further falls to bring shareholders to desperation point.