Broadcaster ITV has revealed a continued fall in advertising revenues as viewers abandon its flagship channel in favour of digital platforms.
The UK's biggest commercial broadcaster, which has recently been the subject of intense bid speculation, said it expected total advertising revenues to slide 4.6 per cent to £750 million in the first half of this year.
ITV1, the home of Coronation Street and The X Factor, has been battling to retain its share of the advertising pot as viewers switch from analogue to digital.
Revenues outside ITV1 have been growing.
The broadcaster's digital channels saw a 42 per cent increase in revenues to £69 million in the first half, while sponsorship was up 24 per cent to £21 million.
However, this was not enough to offset the decline at ITV1.
Chief executive Charles Allen remained upbeat about ITV's prospects and said the company continued to set itself aggressive targets.
The broadcaster has introduced new digital channels and revenue streams, including the addition of website Friends Reunited, in a bid to improve its advertising share.
Total revenues in the first half were expected to be up two per cent on last year, ITV said.
ITV said it believes that once the switchover is complete ITV's overall share of viewers will stabilise.
Advertising share across its digital channels has increased 28 per cent, ITV said.
Across its channels, ITV is now targeting an advertising share of 38.5 per cent by 2012, it said.
Mr Allen said ITV is particularly well-positioned to benefit as the UK television market continues to fragment.
"We have a renewed focus, a clear strategy and the right management team that will enable us to deliver increasing value to our viewers, advertisers and shareholders," he said.
The group also announced it would increase its return of cash to shareholders this year, from £300 million to £500 million.
ITV said it would continue to review its ability to return cash to shareholders in future years as its capital structure allows, but it did not say how much money would be returned.
The Fitch Ratings agency yesterday downgraded the Issuer Default rating to BBB-, the lowest investment grade rating, from triple-B, and revised its outlook to stable from negative, citing the buyback plans and continued challenges to the company's operating performance.
A spokesman said: "ITV is facing a large number of structural challenges in its market, from multichannel
TV, IPTV (internet protocol TV) and DVRs (digital video recorder), and in the short term the UK ad market is showing no signs of recovery from its current slump.
"An increase in share buybacks will further limit ITV's options in addressing these problems and increases its risk profile."
Earlier this year, ITV saw off a takeover bid.