Problems at ITV come firmly under spotlight

Itv will feature in a drama of its own this week as shareholders prepare for the resignation of chief executive Charles Allen and more grim trading figures.

Itv will feature in a drama of its own this week as shareholders prepare for the resignation of chief executive Charles Allen and more grim trading figures.

The City is expecting Allen to end weeks of speculation by announcing his departure from the troubled broadcaster on Wednesday - the day of the company's interim results.

The 49-year-old was credited with creating ITV through the merger of Granada and Carlton in 2004 but has since come under pressure from low viewing figures and tumbling advertising revenues - which are forecast to be down again in the first half after the World Cup failed to provide a much-needed boost.

In March, Mr Allen fended off takeover interest from a consortium of private equity firms which planned to replace him as chief executive with former BBC director-general Greg Dyke.

His departure will trigger a race for one of the most high-profile jobs in UK media but the move is unlikely to deter bidders for the firm.

Johnston Press chairman Roger Parry is among those believed to be interested in ITV and is said to have plans to split the broadcaster into two separate companies - one housing production and the other channels.

The recent speculation has seen shares in ITV rally, although the City is not expecting much positive news from the first-half results.

ITV has already said it expects to report a 4.6% slide in advertising revenues as its flagship ITV1 channel suffers from competition from digital television.

It is thought to have struggled to win viewers and revenues during the football World Cup and analysts are forecasting first-half operating profits to have fallen from £200m last year to between £175m and £192m.

Broker Teather & Greenwood has slashed its forecast for full-year pre-tax profits from £415m to £355m compared with the £424.5m ITV banked last year. It expects revenues at ITV1 to fall 10.5%.

Teather & Greenwood analyst Ji Park said: "We expect the focus of management's presentation to be an update on advertising, particularly any colour on outlook, how management is manoeuvring to arrest viewing share declines at ITV1 and any update on its internet and digital strategy.

"However, the key area of focus for shareholders will be management succession and importantly, if Charles Allen departs, who will fill his shoes."

Increased awareness of the need to save for later in life is likely to be reflected in half-year figures from Norwich Union owner Aviva on Wednesday.

Legal & General, Standard Life and Prudential have set the tone in the past week by reporting encouraging signs on UK sales, as well as identifying significant opportunities for growth in the savings and investment markets. For L&G, individual new business rose by 46% and life and pensions sales lifted 16%.

Warnings of potential retirement shortfalls and activity surrounding A-Day, when new regulations were introduced to make the pensions system simpler, are likely to have encouraged people to save more towards their retirement.

The optimism regarding the UK will be tempered by strong competition, although Aviva is less dependent as 54% of its profits are generated overseas, including from major operations in the Netherlands and France.

The company's international reach is likely to be extended by the end of the year after it recently announced plans to buy the US life insurer AmerUs for $2.9bn (£1.6bn). Aviva's exposure in the US is currently limited to a niche operation based in Boston.

As well as an update on plans for AmerUs, analysts will be looking for progress on its 2008 target of £130m a year cost savings from its £1bn acquisition of RAC.

Aviva is the world's sixth largest insurance group based on worldwide premiums and market value.

Analysts expect it to post half-year operating profits of between £1.65bn and £1.71bn, compared with £1.3bn a year earlier.

The performance and future ownership of Thames Water will be back in the spotlight next week as German owner RWE post its results for the first half of the year on Thursday. Thames has rarely been out of the headlines in recent weeks, amid anger over leakage rates and following the start of a disposal process by RWE. The water company has 13 million customers in London and the South-East and could fetch as much as £7bn in any sale.

RWE favours a stock market listing in London for Thames but also remains open to the possibility of a sale to a third party.

First-round bids for Thames are thought to be due on August 15 with the government of Qatar the latest suitor to be linked to the firm. Other potential suitors are rumoured to include Guy Hands' investment vehicle Terra Firma, Australian company Macquarie, French water group Veolia and a consortium which includes Hong Kong Electric and Cheung Kong Infrastructure, Hong Kong's largest quoted infrastructure investor.

The other area of interest in RWE's first half results on Thursday will be electricity supplier npower.

Earlier this year RWE said annual profits at Thames rose 31% even though it lost 894 million litres of water every day - 34 million litres a day more than industry regulator Ofwat's target.

This summer Thames applied for a drought order and was ordered to invest an extra £150m in order to replace pipes.

Scottish & Newcastle - brewer of the heavyweight brands Foster's, Kronenbourg, John Smith's and Strongbow - is expected to show a healthy increase in profits tomorrow, despite a sluggish market for much of the half year.

In April, the brewer said volumes for its leading brands were up 3% in the first three months of its year, against a 2% decline for the UK beer market. Business should have picked up since then as a result of the World Cup in June and the hot summer weather at around the same time.

Average market forecasts place S&N profits at £186.7m for the six months to the end of June, compared with the £163m reported a year earlier.

One area of interest will be the performance of Strongbow as cider is thought to have grown in popularity, helped by strong promotional activity from rival drink Magners.

S&N's push into international markets, such as India and China, and developments on innovation will also be of interest to analysts.

Premier Foods delivered a reassuring trading statement to the City last month so much of the focus will be on its outlook when it posts first-half results tomorrow.

The company, whose operations include meat alternative Quorn as well as Crosse & Blackwell, said the company experienced strong growth in the first half.

Barclays Stockbrokers expect Premier to post pre-tax profits of £20m compared with £18.5m this time last year.

Analysts will gain a further insight into the Bank of England's surprise decision to raise interest rates when it publishes its quarterly inflation report on Wednesday.

The inflation and growth projections contained within the report were available to members at the meeting of the Bank's Monetary Policy Committee, which voted to raise rates by quarter of a percentage point to 4.75%.


David Whetstone
Culture Editor
Graeme Whitfield
Business Editor
Mark Douglas
Newcastle United Editor
Stuart Rayner
Sports Writer