Carlton sees ad slump

December 4, 2001 Posted: 1133 GMT

LONDON (CNN) -- British broadcaster Carlton Communications has blamed an advertising slump for a sharp drop on annual profit.

Carlton (CCM), part owner of Britain's largest commercial TV network ITV, reported a 39-percent fall in annual profits on Tuesday.

The London-based company said it would continue with its digital TV joint venture, but was looking to cut costs there by at least £100 million in 2001/02. ITV Digital is owned by Carlton and media group Granada (GAA).

Carlton Chief Executive Gerry Murphy said 100 jobs would be cut this year, in addition to the 300 jobs slashed in the financial year just ended, bringing the total workforce down to about 3,200.

Carlton is the latest advertising and media company to blame the global economy for poor profits. UK advertising company Cordiant warned on Monday it too planned to shed more jobs because full year revenue is expected to decline more than expected.

Cordiant, which employs 10,000 staff in 80 countries and counts Coca-Cola, DaimlerChrysler and Lufthansa among its customers, said it would cut 1,100 jobs this year. In August, it announced 400 jobs would go.

However, the industry is expected to show slow signs of a recovery next year after one of its worst years ever in 2001, a leading forecaster said on Monday.

Zenith Optimedia, the world's fourth-largest global media services agency,  said in its latest report that it expected an upturn in global advertising spending to gather pace by the fourth quarter of next year, but 2002 will still show a decline of around 1.3 percent after a 5.8 percent tumble this year.

Advertising spending is one of the first things to go when companies hit bad times, and advertisers have been slashing their budgets this year in an economic downturn made worse by the September 11 attacks in the U.S..

However, the head of the second biggest advertising group, WPP, Martin Sorrell, said he had not yet seen any reprieve.

"We have seen nothing yet that indicates there has been a change, a reduction in the rate of downturn. I don't see as many of the rays of sunshine that others have been talking about," he said.