UTV Media has reported a 90% fall in pre-tax profits as costs at its new channel, UTV Ireland, climbed over £12m and dragged the Northern Ireland-based company down in the first half.
UTV Media, which owns the ITV franchise in Northern Ireland as well as free weekly magazine Sport, saw pre-tax profits fall from £10m to £1m year on year in the first half as the performance of the newly-launched UTV Ireland failed to meet expectations.
UTV Ireland made an operating loss of £7.5m in the first half, with the channel’s costs hitting £12.4m. Revenues at the channel were £4.9m, below expectations “as a result of a slower build in audience”.
UTV Ireland is expected to make an £11.5m loss this year.
UTV’s Northern Ireland TV station saw revenues drop 2% in the first half, due to an 11% fall in regional ad revenue owing to cuts by government departments.
Total TV revenues rose from £20.5m to £24.5m year on year because of the launch of UTV Ireland. However, the channel’s launch pulled the TV division into a loss of £3.3m.
“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,” said Richard Huntingford, chairman of UTV Media. “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.”
Total group revenue rose slightly from £57.8m to £58.3m.
Radio GB, UTV’s network of 12 local radio stations in England and TalkSport, saw revenues and profits each fall by 9% to £26.1m and £5.5m respectively.
UTV Media said the revenue fall was all due to TalkSport, which was boosted by the World Cup last year, that saw revenues fall by 1%% in the first half.
UTV Media’s net debt widened slightly from £43.5m to £46.9m.
The company’s gearing – the ratio of net debt to earnings before interest, tax, depreciation and amortisation – has jumped from 1.72 times in the first half of last year to 3.4 times.
The company’s gearing governs its banking facilities with its banks. UTV Media said it has had to agree an extension on its banking covenant from 3.5 to 4.5 valid until 30 June 2016.
UTV Media did not make a comment on takeover talks with ITV which emerged earlier this week.
