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Granada warns on revenue
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September 27, 2000: 10:41 a.m. ET
Cautious words clobber UK media company along with rival's shares
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LONDON (CNNfn) - Granada Media PLC warned Wednesday that revenue in its broadcasting business was set to fall, as a shortage of major sporting events in the next six months lessens its chances of squeezing cash out of advertisers.
The cautionary comments from Britain's biggest terrestrial television broadcaster undermined the company's stock, which fell to their lowest point since Granada Media listed its shares in July.
 The barren period for sports coverage in the coming months are expected to contrast with the recent profusion of big events, when the company benefited from televising the Rugby World Cup and Euro 2000 soccer championships.
The company's shares fell 11.7 percent, or 59 pence, to 444 pence ($6.49) in London Wednesday afternoon, having earlier dropped as far as 431 pence, the lowest level since Granada Media's demerger from the former Granada Group, a U.K. catering and media conglomerate. Granada Media shares were sold at 515 pence in July, valuing the firm at $11.3 billion.
Wednesday's tumble followed a drop of 12.2 percent Tuesday, after Merrill Lynch cut its estimate of Granada Media's earnings next year by 21 percent to £256 million, citing softer advertising revenues and rising costs of investment in digital media.
Estimates get more pessimistic
Analysts at ABN Amro cut their forecasts for next year's advertising revenue at both Granada Media (GME) and rival Carlton Communications PLC (CCM). Carlton shares crashed 5 percent.
"What we are looking at is a very, very strong first half (in the year ending Sept. 30, 2000) and then a sudden slowdown," said an analyst at ABN who did not wish to be identified. "We expected the second half of the year to show growth of only 2 percent, but in the last two to three months, things have slowed down so much that we are now looking for a 4 to 5 percent decline for the second half."
Advertising spending by Internet start-up companies and carmakers had slowed significantly in the past few months, the analyst said.
ABN said it had cut its forecast of Granada Media's advertising income for the year ending Sept. 30, 2001, and was now expecting revenue to grow 2  percent growth, compared with an earlier estimate of 6.2 percent. For Carlton, the new forecast was 1.2 percent growth, down from the previous 6 percent estimate.
Granada Media said it expects to report 8.4 percent growth in ad revenue for the year ending later this week. It said that was a better rate of expansion than that enjoyed by its rivals in the U.K.'s Independent Television network and the quickest for more than 10 years.
Granada Media's biggest shareholder, the catering and hotel company now known as Granada Compass PLC (GCP), fell 4.6 percent to 609 pence, despite publishing a statement saying its earnings were in line with management's estimates. Granada Compass owns 80 percent of Granada Media. 
--from staff and wire reports
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Granada Media
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