Analysts downgrade BSkyB forecasts

Analysts have revised earnings forecasts for BSkyB, as the advertising downturn begins to threaten pay-TV companies.

The media team at Credit Suisse First Boston said the satellite broadcaster will suffer a fall in advertising revenue over the next two years, and could receive less payment than expected for carrying ITV services, including ITV, ITV2 and ITV Sport, on its platform.

BSkyB's core earnings estimates were revised down from ?332m year to ?287m for next year, a fall of 13%.

The figures for 2003 were cut by the same percentage, from ?583m to ?506m.

"The downturn in the advertising markets and expectations of reduced payments from ITV for the distribution of ITV1 on Sky Digital explain most of the revisions to our forecasts," said the CSFB research note.

A BSkyB spokesman said that advertising accounts for less than 15% of the company's revenue, and added that more important indicators such as subscriber growth and churn levels were pointing in the right direction.

Negotiations between BSkyB and ITV over a carriage deal are ongoing, but ITV insiders today warned that an agreement is still a long way off.

ITV executives have decided to launch the network on digital satellite by year end, regardless of striking a deal with BSkyB.