Group's television results make for poor viewing

UTV's radio interests are enjoying strong profits, but the TV arm looks subdued, writes Laura Slattery

Like a casual viewer flicking up and down the multi-channels, UTV is not afraid to take a look at a possible purchase for a little while, then decide it is not to its taste.

The group, which last year started and then stopped merger talks with Scottish Media Group (SMG) and withdrew from a possible purchase of TV3, spent €500,000 in 2006 on these "aborted transactions".

A third attempt to merge with SMG is in theory still on UTV's agenda, although stock market rules mean it cannot approach SMG's new management for six months. This gives UTV the time to sit back and enjoy SMG's results in April, which will give it a flavour of the new management's strategy. In the meantime, UTV has made no secret of its desire to buy British radio group Chrysalis.

Its most recent acquisition, the Wireless Group, is emerging as a good buy for the company, with the Wireless Group's main interest, radio station Talksport, recording a 18 per cent increase in turnover in 2006.

UTV's portfolio of Irish radio interests is also holding up well. It owns Q102 in Dublin, 96 FM and 103 FM in Cork, Live 95 FM in Limerick, LMFM in Louth and Meath and U105 in Belfast. Profits rose 26 per cent to £5.8 million (€8.5 million) in 2006, although this does not include U105's £900,000 start-up loss.

Meanwhile, finance director Paul O'Brien confirmed yesterday that UTV is conducting a strategic review of its new media business. The outcome could be a possible sale of this "least core" part of its operations. But UTV's radio and new media exploits don't fully distract anyone browsing its results from the drama in its television division, which is suffering due to the falling audience ratings of the ITV network to which it belongs.

UTV has been able to keep its share of peak-time viewing at 33.5 per cent - no mean feat in the age of Sky Plus. But the ITV network has seen its share slip to 26.8 per cent, allowing advertisers to secure discounted rates under the Contract Rights Renewal (CRR) system.

Just over half of UTV's advertising revenues is "regional", coming from Belfast or Dublin. UTV can also get upgradings on national advertising rates thanks to its higher peak-time share.

But until new ITV chief executive Michael Grade secures a change to the CRR formula - or until ITV improves the quality of the programming that UTV must take - then UTV's television profits are likely to remain subdued. The group's attention may increasingly turn elsewhere.