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Granada profit up
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November 29, 2000: 11:16 a.m. ET
U.K. broadcaster upbeat on outlook for ad revenue, but annual profit lackluster
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LONDON (CNNfn) - British broadcaster Granada Media PLC announced Wednesday that its advertising revenue was picking up from a slump in October as audience ratings improved, but its shares backtracked from an earlier rally as annual profit growth and its outlook left analysts unimpressed.
Granada Media, Britain's biggest terrestrial TV broadcaster, said operating profit for the year ended Sept. 30 rose 8 percent to £253 million ($354 million), just about matching the least ambitious forecasts of analysts polled by Reuters. Estimates had ranged from £250 million to £273 million.
Revenue rose 9 percent to £1.09 billion as net advertising revenue grew 8.4 percent from the 1999 level. Granada Creative, the company's program production division, posted a 10 percent sales increase.
 Granada Media (GME) shares dipped 0.3 percent to 381 pence in late afternoon trade, after earlier surging as much as 6 percent.
The broadcaster said that so far in the new financial year, audience ratings for the U.K.'s Independent Television (ITV) network, of which Granada's regional broadcast franchises form part, were improving from recent declines. Net advertising revenue in November was likely to be marginally higher than in the same month a year earlier, while bookings for December were already up 7 percent.
Granada Media had warned in September that advertising revenue in the first half of its 2001 financial year was likely to drop, blaming the relative lack of major sporting events to draw big audiences.
"Advertising growth was in line with expectations following that statement. The outlook was encouraging without giving people too much to get excited about," said media analyst Richard Jones at investment bank UBS Warburg.
But Jones said ad and audience share growth couldn't be judged just on a month-to-month basis.
Earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 11 percent to £279 million. EBITDA is a measure used to show a company's underlying profitability, excluding effects such as costs related to mergers and acquisitions.
A big increase in spending on digital television and new media took a chunk out of bottom-line profit, which fell 45 percent to £261 million. Costs for such new ventures and other exceptional items shot up to £176 million from £12 million a year earlier.
"There are enough things to hold the stock back for the time being such as issues over advertising growth and issues over programming costs after next year," Jones said.
Figures from last year were reported as if the company were already a separately listed entity. Granada Media was created when Granada Group, now known as Granada Compass PLC (GCP), carried out a partial divestment of its media interests and listed them on the stock market on July 11. Granada Compass, which focuses on lodging and catering, still owns 80 percent of the media company.
Granada Compass shares were up 0.8 percent at 663 pence. 
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Granada Media
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