By Simon Bond

    ITV is the UK's favorite network, attracting millions of viewers and pioneering landmark shows like "Who Wants to be a Millionaire."
    But despite its success in ratings, ITV is being hit by a sharp downturn in advertising revenue.
    Granada and Carlton Communications, which between them control 90 percent of the ITV network of regional franchises, are taking the brunt of the collapse in revenues. 
    Granada's share price has fallen by more than 30 percent since last summer, and Carlton is down by more than half from last year's peak. ITV's advertising revenue for the first half of this year will be down by at least 14 percent. 
    And while most analysts expect an upturn in the second half of the year, the company's total revenue forecast of $2.7 billion is down 4 percent from the previous year.
    However, while its revenues fall, ITV remains the most-watched channel, even in homes with access to other options such as satellite or cable. 
    In the first quarter of this year, its peak-time audience share averaged 38 percent, 10 share points ahead of BBC1.
    But rather than flocking to spend their money with ITV, advertisers are queuing at the doors of Channel 4, its much smaller rival network that was set up by government charter to provide television to cater to minority interests.
   There's a reason for their flight from ITV, and it's to be found in a closer look at its audience numbers.
    A recent report by the advertising industry's trade body, the Institute of Practitioners in Advertising, shows that while ITV 's peak-time viewing figures may be strong, they are continuing to decline among the all-important 16-34 age group. 
    In 1999, ITV accounted for nearly 25 percent of this group's viewing. Last year the share slipped to under 22 percent, and in the first quarter of this year it fell further, to 20.8 percent.
    Meanwhile Channel 4, although attracting a much smaller audience than ITV, has increasingly interpreted its "minority viewer" mandate to mean the young, affluent viewers that UK advertisers love. 
    Furthermore, media buyers have spotted that Channel 4 is delivering this caliber of audience at a much lower cost compared to ITV and have rewarded the network with more and more of their spending. 
    Channel 4's revenues grew by 7.7 percent between 1999 and 2000 and will exceed 4 percent this year. That's not bad, considering the current market downturn.
    ITV executives have little to look forward to that might reverse this flight of younger viewers, certainly in the short term. 
   Their latest hope had been for a mass-market advertising splurge around the launch later this year of the new generation of mobile phones. 
    But the phone companies have now shelved this launch for at least another 12 months. Worse, with the premium pricing of the new mobile phones, the campaign will likely target young, affluent early-adopter types. That is to say, your typical Channel 4 viewer.

May 18, 2001 © 2001 Media Life

-Simon Bond covers European media for Media Life, writing from outside of London.

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