UTV first-half profits slump on Irish channel costs

UTV has announced a pre-tax profit of £1 million (€ 1.37m) for the first half of 2015, down £9 million on the same period a year earlier due to significant losses incurred by its new Irish television channel.

Group operating profit was down to £2.7 million compared to £11.2 million for the preceding year while revenue was down slightly from £58.3 million to £57.8 million.

UTV confirmed earlier this week it is in discussions to sell its television assets to ITV. The move comes after the group has accrued big losses in relation to UTV Ireland, which launched at the start of the year.

UTV Ireland posted a turnover of £4.9 million for the first six months while operating losses rose to £7.5 million, from £500,000, creating an overall loss in the company’s television channel of £3.3 million versus a £4.4 million profit for the same period a year earlier.

"The challenges of establishing a new television channel are evident in these results which reflect the significant losses incurred by UTV Ireland in its first six months on air. Less evident, but not to be lost sight of, is the inherent value created by the establishment of a mainstream television channel in Europe's fastest growing economy, with long term licensing, programme supply and infrastructure in place," said chairman Richard Huntingford.

The group admitted that turnover in UTV Ireland was below expectations “as a result of a slower build in audience numbers.”

In the first six months of operation, UTV Ireland’s share of commercial impacts was 11.4 per cent, compared to an original forecast of approximately 15 per cent.

Early teething issues, such as the re-tuning of domestic digital receivers, further compounded the problem of audience under-delivery, resulting in turnover for the first half being recorded at £4.9 million. UTV Ireland accrued costs of £12.4 million in the first-half, the group said.

“UTV Ireland’s progress is closely linked to the performance of ITV network’s programming, which is the mainstay of its output, and there are new series scheduled for the autumn which have been favourably commented upon. Alongside this, we are implementing an action plan which includes stronger domestic programming, more effective marketing and a better defined branding strategy,” said Mr Huntingford.

Turnover in UTV's Northern Ireland television business was down by 2 per cent, reflecting an 11 per cent decrease in advertising revenue. The group attributed the decline to a significant cut in expenditure by government departments in the Northern Ireland Assembly. Incorporating the results of Tibus and Simply Zesty, operating profit in the division was £4.2 million, as against £4.9 million a year earlier.

Operating profit in the group’s radio division was £900,000 lower at £7.9 million on turnover of £34.6 million. Irish radio advertising revenues fell by £1.5 million to £8.8 million over the first half, which the company said was due to currency fluctuations and the market failing to respond to increasingly positive economic data.

Irish radio operating profit for the first half was £0.4 million lower at £2.1 million.

The group was optimistic about the market responding better in the coming months in the Irish radio market however. It forecast growth of 3 per cent in local currency for September which would result in a 5 per cent reduction on the same basis for the third quarter as a whole.

Revenues in the group’s British radio division were down by £2.6 million to £25.8 million, with lower revenues at Talksport accounting for all of this.

UTV said it was experiencing good growth from both its Dublin and London offices and also expected to generate 4 per cent growth in NI advertising revenue in the current quarter.