The ITV companies are facing a dramatic decline in their ad revenue in
real terms over the next five years as TV audiences become spread over
more and more channels.
According to forecasts by the consultant, KPMG, ITV will have a compound
annual growth rate of around -1.4 per cent at 1995 prices until 2001.
KPMG’s media analyst, Paul Styles, said that the ITV companies could
expect ad revenue of pounds 1.587 billion by 2001, which will still make
the network three-times bigger than its nearest competitor, Channel 4.
Styles, who stressed that the figures are part of an extensive
examination of ITV’s likely performance over the next five years,
forecast a compound annual growth for Channel 4 of just under 1 per cent
Total revenue for the channel is expected to hit pounds 427 million, but
this will still be more than double the official National Advertising
Revenue figure for Channel 5, which launches next year.
But Styles said that the two terrestrial commercial channels will find
their ad bases slowly eroded by the growth in cable and satellite TV and
the arrival of Channel 5.
However, these new channels are also expected to increase the TV
advertising cake from pounds 2.2 billion in 1995 to pounds 2.6 billion
in the year 2001.
He also expects digital terrestrial channels to begin taking significant
levels of ad revenue by the end of 2001.
Channel 5’s growth up to 2001 is expected to be around 14.5 per cent,
with revenue hitting pounds 188 million over the next five years.
Total revenue for the UK’s cable and satellite channels is forecast to
hit pounds 267 million, on a growth of over 16 per cent.
Digital terrestrial television, which is due to launch within the next
few years, is expected to grow by more than 71 per cent by 2001, with
advertising revenue by then standing at pounds 70 million.