TV revenues predicted to improve in August

Despite fears that TV advertising revenue would begin to tail off after the World Cup had finished, August is showing year-on-year improvements across the board.

Although August is traditionally a depressed month for TV advertising because of low levels of TV viewing, early predictions for 2002 suggest total TV will top £218 million, which is an increase of 7 per cent on last year.

Some stations are predicted to do better than others from the increase in revenue - Sky is expected to be up by 3 per cent, ITV up by 5 per cent and Channel 5 up by 25 per cent.

This will be the fourth consecutive month in which TV stations have experienced a growth in advertising revenue, although the year-on-year increases are not as high as in previous months. This has led the market to remain relatively cautious, in particular concerning how the remaining four months of the year pan out.

Nick Milligan, Channel 5's deputy chief executive, said: "While we are delighted with the Channel 5 result, we are still very concerned about the total TV market. Visibility is six weeks at best and our client base is reluctant to discuss year-end, let alone 2003. If interest rates go up we could see a flat line for another 18 months. The good news is that viewing levels are back up and there is a great opportunity to sell TV as a medium."

Martin Bowley, Carlton Sales' chief executive, agreed: "Yes, there are some green shoots and the market is quite active but the last calendar quarter will be the decider."

Although the increase in revenue is good news for the TV stations, there is concern that it could lead to rampant cost inflation.

Last August was a particularly disappointing month in terms of advertising revenue, with total television taking just over £205 million. This, compounded with the declining audiences on ITV and Channel 4, is likely to lead to cost inflation across most of their audiences.

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