Q1 2011 TV NAR (Net Advertising Revenue) has delivered strong year-on-year growth of about 8%, yet the monthly variations are large, with a predictably sharp decrease in March based on past year comparatives countered by a large Christmas-style upswing in the Easter and Royal Wedding month of April

After several years of decoupling total display and TV advertising trends from those in the broader economy due to negative structural causes, the underlying positive correlations are expected to reappear as the structural factors subdue

The general economic outlook suggests stable growth in TV NAR during 2011 of about 5%, remaining flat to marginally positive in real terms beyond 2011 as long as conditions of weak economic growth last, but with significant risks of a sudden sharp downturn in the short to medium term

Weak Q2 commercial viewing figures fuelled stories that ITV1 NAR could be approximately £100 million lower in 2005 unless audience share rallied in H2 2004. This was due to the Contracts Rights Renewal (CRR) remedy, imposed by the Competition Commission as a condition for the merger of the Carlton and Granada sales houses to create ITV Sales, which now controls over 50% of television advertising sales.

Ofcom produced a tough and rigorous document on ITV licence fee renewals. Although the paper is dense and difficult to understand, we think it is bad news for ITV. The likely licence fee settlement is going to be higher than commentators might have expected six months ago. The prime reasons are Ofcom’s proposed move to assessing the ‘digital dividend’ on the basis of digital viewing, not households and, second, taxing the benefits of the lower costs of the merged ITV business. The first of these is the more important financially since only about 57% of ITV viewing in digital houses is of the digital ITV service.

We have long been sceptical of claims that music download stores like iTunes, combined with hardball legal tactics against pirates, would rapidly turn around the fortunes of the music industry. The wildly successful iPod has driven the growth of digital music downloads, and is expanding the population of music downloaders that pay for music - but not forced a change of heart by file sharers! Music download sales are expanding but not fast enough to balance the decline in physical formats. Globally, we project sales of music downloads of $3.5 billion by 2010, about 10% of the total music market.