UTV issues warning on profits for new Irish station

UTV Media, the Belfast based, Dublin-listed company, has warned that its six-month old bespoke Irish television venture will make bigger losses than expected and that audience growth has stalled.

In a statement to the stock exchange on Tuesday, it said UTV Ireland, which only launched in January, is struggling to hit its viewing and commercial targets. It said growth had stalled after the first couple of months of operation.

The company blamed the “volatility” on “the difficulty of predicting audiences for a start-up channel in a competitive market”.

The company has reviewed its financial guidance and says it now expects UTV Ireland to make a larger-than-expected loss of £11.5 million in 2015, up from the most recent prediction of £8.5 million.

It had originally hoped to break even on the venture by the end of the year.

“It is clear that the channel will take longer than originally anticipated to become profitable,” UTV said in a statement.

To give it further financial flexibility to cope with the sluggish start, UTV Media has sought, and been granted, a relaxation on the rules surrounding its debt facilities.

Its group of bankers includes Bank of Ireland, Danske and Ulster Bank, according to its annual report. The group will now be allowed stretch its debt to earnings ratio from 3.5 times to 4.5 times.

Its debts totalled €55 million at the end of 2014.

UTV Ireland, which features ssports and news programmes and a chat show presented by Pat Kenny, is performing poorly during the daytime and at weekends, according to the company.

Industry figures in circulation suggest that viewership numbers for its news programme, which was recently moved from 6.30pm to 5.30pm, have sunk.

UTV said weekday peak time programming was “performing well” but figures have been “disappointing” outside these hours.

“Overall share of commercial impacts is therefore around 11 per cent which is lower than the target set for the channel’s first year of operation,” it said.

The board of UTV said it has approved an “action plan” to tackle the problems.

“[THE BOARD] recognises that this will take time to deliver the required improvement in viewership. The board is therefore assuming no significant improvement in overall audience levels for the second half of the year,” it said.

The company would not give any further information on what the “action plan” might contain, but confirmed it had not asked the Broadcasting Authority of Ireland for a derogation on any of its licensing commitments.

The plan was drafted by local manmagement and presented to the board for approval.

Michael Wilson, the head of UTV Television and the man who fronted the launch, remains in charge of the new venture's programming.

Scott Taunton, who is UTV Media's chief operating officer, was previously in charge of the commercial side of UTV Ireland.

In recent weeks, however, responsibility for driving the new channels revenues was shifted to UTV’s radio chief in Ireland, Ronan McManamy. Mr Taunton has moved to Britain to oversee radio operations there.

There have been rumours of fierce debate at board level within the company about the future direction of UTV Ireland.

John McCann, the industry veteran who is chief executive of UTV Media, had been due to retire in 2013, but said previously he was asked to stay on to oversee the launch. The company said it had no new information on when his retirement might happen.

A note from Davy stockbrokers this mkonth alluded to the difficulties being faced by UTV Ireland.

“We think it unlikely that UTV Ireland will be profitable before 2018,” Davy said in its note