UTV Media Falls as Earnings Forecast Disappoints: London Mover

UTV Media Plc, the owner of U.K. Premier League soccer radio broadcaster Talksport, fell the most in two months after forecasting full-year pretax profit that would be less than estimated by some analysts.

Pretax profit will probably be 18 million pounds ($28 million) on revenue of 117 million pounds, Finance Director Norman McKeown said in a phone interview after the company reported that earnings on that basis declined 43 percent in the first half. Analysts at Peel Hunt and Goodbody Stockbrokers had estimated 19 million pounds and 19.3 million pounds, respectively.

“The first six months of the year has been very challenging,” McKeown said in the interview. “With the World Cup year and the benefits that would bring to Talksport in particular, we should see increased revenue and profit growth.”

The shares dropped 4 percent to 167 pence at the close of trading in London, the most since June and the biggest decline on the FTSE All-Share Media Index. That pared Belfast, Northern Ireland-based UTV’s gain this year to 37 percent, or fifth best on the 22-company index. The stock had risen 7.9 percent on Aug. 23, the previous trading day, to the highest price since 2008.

Although third-quarter trends “look to be improving, this coupled with investment costs in radio will be insufficient to enable the company to meet our forecasts for the year,” Patrick Yau, an analyst at Peel Hunt, wrote in a note today. Yau cut his recommendation to sell from hold and lowered his 2013 pretax profit estimate to 18 million pounds.

Analysts at Goodbody, Shore and Numis reiterated advice to buy the shares, citing the expected benefit of the 2014 World Cup.

Record Audience

There are “clear signs of return to revenue growth in all our business units,” UTV said today in a statement. Talksport’s audience rose to a record and the station extended an agreement to offer Premier League matches across Europe. First-half pretax profit fell to 6.1 million pounds while revenue declined 10 percent to 55.2 million pounds.

“UTV saw its business impacted more negatively than we would have thought by the weaker advertising backdrop” toward the end of the first half, Gavin Kelleher, an analyst at Goodbody, said today in a note.

Recent growth in advertising revenue, as well as anticipated earnings from the World Cup and Talksport International should “underpin double-digit year-over-year profit growth” next year, he said.

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