By Kate Holton
LONDON (Reuters) - Britain's ITV (L:ITV) reported stronger than expected first-half earnings despite weak advertising income, showing that new boss Carolyn McCall will inherit a media group better placed to withstand economic downturns than in the past.
Shares in Britain's biggest free-to-air commercial broadcaster rose 4 percent on Wednesday after the group reiterated its full-year targets helped by revenue growth from its programme production and online businesses.
That helped to cushion an 8 percent fall in advertising revenue recorded by its network of television channels, which it attributed to uncertainty sparked by Britain's pending exit from the European Union and an inconclusive election.
While the group expects advertising to remain tough, it sees the pressures easing in the third quarter of the year and said it would outperform the wider market in 2017.
"We're a different business to what we were the last time the market had to face into a downturn in advertising," Finance Director and Chief Operating Officer Ian Griffiths said.
"In the first half of this year our broadcast business made 50 percent more profit than the whole of the ITV group made the last time the ad market dropped."
NEW YEAR, NEW BOSS
Analysts agreed that ITV was in much stronger shape than the last advertising downturn in 2008, when its share price fell as low as 14.7 pence, compared with Wednesday's price of 182 pence.
McCall, who is leaving budget airline easyJet (L:EZJ) for ITV in January, will still have to navigate tough markets, with advertisers in the retail, finance and food categories proving reluctant to spend due to uncertainty on the economic outlook.
The broadcaster of "Coronation Street" and "Britain's Got Talent" said it had success on screen as viewers tuned in to watch reality programmes such as "Love Island", while its production arm sold television formats and drama shows around the world.
Earnings per share came in at 7.7 pence, down from the 8.5 pence it recorded last year but ahead of forecasts at 7 pence.
"One factor to note is that, despite the 8 percent drop in ITV net advertising revenue, the adjusted earnings per share only fell 9 percent, demonstrating how ITV has become a far less operationally geared business as it has grown its non-TV advertising revenues," Liberum analysts said.
