Carlton to halve dividend, broker predicts

Carlton Communications will halve its dividend payment to shareholders to alleviate financial concerns, the ITV company's own stockbroker predicted yesterday.

Cutting the dividend would be a new blow to investors whose shares have fallen to 10-year lows amid worries about the ITV network's prospects against the background of a sharp fall in advertising revenue.

Michael Green, the chairman and largest individual shareholder, would find the cut painful. Last year his stake netted a dividend of £830,000, so he could lose £400,000 if the reduction is approved by his board.

UBS Warburg, the house stockbroker, described the dividend as "a significant burden on cash resources" and predicted a cut of "around 50%".

Last year directors halved the dividend from 16.6p per share to 8.3p. They are under stood to be considering either halving it again or cancelling the dividend altogether. The shares have fallen 87% to 111.5p since March 2000.

A Carlton spokesman said: "A decision on the final dividend will not be taken by the board until they have approved the annual figures and taken into account prospects for the future."

Final results are due at the end of November.

Daniel Kerven, analyst at UBS Warburg, told investors: "We would regard a cut in Carlton's dividend as a prudent and sensible move, which would increase its financial flexibility and help alleviate concerns regarding its financial position, which has dogged the share price in recent months."

Carlton's existing dividend could be seen as overly generous. "It is yielding 7%, far higher than the sector average of 1.9%," he said. Cutting the dividend would free up cash for business purposes.