A mixed fiscal bag

Carlton's sales up but pre-tax profits down

LONDON — Carlton Communications has posted mixed results for the six months ending March 31 despite headline pre-tax profits of £170 million ($272 million), up 5%, on sales of $1.6 billion, up 10%.

After a $79.4 million investment in digital TV (primarily the startup costs of the digital terrestrial TV platform ONdigital) as well as investment in Internet ventures, Carlton’s pre-tax profits were down 37% to $116 million, but in line with expectations.

The ITV network company also said it is investing an additional $160 million in ONdigital, currently in a heated battle for subscribers with satcaster rival SkyDigital. The money is part of $240 million earmarked for digital media in general this year.

Carlton co-owns ONdigital with fellow ITV company Granada Group. Over the next two years, the two are spending $320 million to finance giving away set-top boxes to subscribers (Daily Variety, May 25).

Sales for Carlton’s TV division rose 2% to $673.1 million. Operating profit was up 15% to $140.5 million, boosted by 11% growth in advertising sales in Carlton’s three regional ITV channels.

Steven Cain, the company’s new chief exec, also announced plans to double TV programming output within three years.

Technicolor, Carlton’s film and video company, saw operating profit of $133.8 million before exceptionals, up 17%, on sales up 20% to $826.6 million. The video division was up 32% to $84.6 million on sales of $560.6 million, up 33%.

The film division, however, was down 2% in sales to $265.9 million with operating profit down 3% to $49.1 million. The downturn was attributed to the loss of the Sony contract in the U.S. Cain, however, said that business with Technicolor’s remaining clients had increased.

Quantel, Carlton’s post-production technology company, posted poor results, attributed to “subdued” U.S. and Far East markets. Operating profit was down 64% to $8.2 million on sales of $95 million, down 15%.