Losses at UTV Ireland, the new television channel set up by UTV Media, will be in the region of £6 million (€8.4 million) this year, the company has advised shareholders.

The performance of the new venture, which went on air on January 1st, has been hit by delays to securing its positions on the electronic programme guides (EPGs) of the main television platforms. This had a knock-on effect on its negotiations with advertising agencies.

Building an audience for the channel has been “slower than expected”, the company said, while advertising revenues will be “lower than planned”. The company previously guided that the first-year loss would be £3 million.

UTV Media group chief executive John McCann said there had been "teething problems" with UTV Ireland, but stressed that it was still early days. "This is a 10-year project. We have a 10-year licence and we are 10 weeks into it."

UTV Ireland’s designation as a channel with “public service character”, which secured a vital spot on public service television platform Saorview, took “substantially longer the anticipated”, the company admitted.

This in turn delayed its carriage negotiations with the biggest television platform, Sky.

The channel was not awarded “public service character” status until December 1st last year, meaning many of its negotiations with advertising agencies about booking ads on the channel occurred in the run up to Christmas, “which wasn’t ideal”, Mr McCann said.

“We underestimated the amount of time it would take.”

The delay also affected its communications with Saorview users, many of whom would have had to manually retune their set-top boxes in order to receive the channel, and the group believes there are “still a considerable number of Saorview homes that have not retuned their boxes to UTV Ireland”.

UTV Media made an operating profit of £19.7 million (€27.4 million) last year, down 2 per cent, the company’s financial results show. During 2014, it invested £3 million in setting up UTV Ireland.

The Belfast-based media group’s revenue climbed 8 per cent to £116 million, while pre-tax profits rose slightly to £17.2 million.

The owner of talkSport was boosted by the fact that 2014 was a World Cup year, which prompted record audiences and drove revenues at the radio station to £29.7 million, up 22 per cent on 2013.

The company also cited an “improving” economic environment in the UK and Ireland. Television revenue at its operation in the North rose 4 per cent.

Revenue at its Irish radio division, which includes stations such as Q102 and FM104, was flat. However, it was down 10 per cent after adjusting for foreign exchange headwinds, which the group signalled was continuing to have an impact on profitability.

It was a good year for talkSport, with profits at the British radio division, which account for almost half of UTV Media’s revenues, rising 45 per cent as a result.

Improved prices for ads should help the group maintain profitability at talkSport in 2015, despite the absence of a major football tournament, it said.

The company is looking to sell some or perhaps all of its local radio stations in Britain, but not talkSport or any of its Irish stations, where a “reasonably modest” recovery is underway.

UTV’s Irish radio advertising revenues will be “broadly flat” in the first quarter of 2015, and when the further weakening of the euro is taken into account they will continue to run down 10 per cent.

Revenues at UTV’s Northern Ireland channel are expected to be up 3 per cent in the first quarter, thanks to growth derived from its London and Dublin sales offices.

“There continues to be some weakness in the Belfast marketplace, where budget cuts recently introduced by the Northern Ireland Assembly are depressing government advertising expenditure,” UTV Media chairman Richard Huntingford said.

Total capital expenditure in UTV Ireland, including the £3 million set-up costs, arrived at £5.6 million, which was “lower than budgeted”. Notwithstanding these costs, net debt at the group fell £3.4 million to £46.2 million.

Mr McCann said the performance across its divisions provided “confidence that our new venture UTV Ireland will emulate its older siblings and over time, build a stronger audience base”.

The company reiterated its ambition for UTV Ireland to become the second most-watched channel, after RTÉ One, and indicated this could be achieved within two years.

The group has proposed a final dividend of 5.43p, which would result in a full-year dividend to shareholders of 7.25p, up from 7.00p in 2013. Its annual general meeting and next trading update are scheduled for May 14th.