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ITV1 ad revenue falls 12.5%

Programming budget remains unchanged

LONDON — Ad revenues at ITV1, the flagship web at Britain’s biggest terrestrial private broadcaster, ITV, will be down around 12.5% for 2006.

But there was much needed good news for the outfit, which published a trading statement Tuesday, as it announced that ad coin at digital channels like ITV 2 and ITV 3 had surged by 40% year on year.

The perf was “in line with current expectations,” but could have been worse still because of a complex formula called Contract Rights Renewal that allows advertisers to receive discounts when ratings fall.

“2006 trading remains in line with current market expectations and, while the airtime sales environment remains challenging, our digital channels continue to perform strongly,” said John Cresswell, the ITV interim chief executive.

ITV’s program budget is expected to remain unchanged at about $1.9 billion in 2007.

“Maintaining the programming investment on ITV1 will deliver new and improved programming to our customers, contributing to schedule performance and to share of commercial impacts,” said the broadcaster.

There has been speculation that new executive chairman, Michael Grade, who starts work on Jan. 8, will beef up investment in programs.

Meanwhile a new report from accountants PricewaterhouseCoopers LLP reckons that traditional broadcasters like ITV face long-term problems as more ad money migrates to new media.

Said David Lancefield, partner, PricewaterhouseCoopers LLP: “Some 70% of the recent downturn in the U.K. TV advertising market can be explained by audience shares and economic conditions, relative to a historic average.

“We believe the remainder represents structural shift in the TV advertising market. The concepts of ‘TV’ and ‘ advertising’ need reinterpreting in the new era of converged media — both are much broader concepts than ever before.”