Kate Bulkley, Media Analyst.

Media money: WPP and Virgin Media

By Kate Bulkley

Broadcast News

For Broadcast August 23, 2007

What does WPP's ad outlook mean for ITV?

Forecasting can be a dangerous occupation. The weather, the football results, the stock market - not one is easy to predict. But when an esteemed voice like Sir Martin Sorrell starts pontificating about the future of the UK advertising market, his view is as good as any you can rely on.

Last week, Sir Martin delivered the half-year results for WPP - the second-largest advertising group in the world - and reported that revenue growth in the UK was worse than anywhere in the world. WPP saw its UK business rise a little, 2.3%, but it was low compared with North America, up 5.1%, and the combination of Asia, Latin America, Africa and the Middle East region, which was up 10.1%. Even continental Europe climbed 3.1% during the period.

The ad man did, however, say that 2008 would be a bumper year bolstered by the Beijing Olympics, the US presidential election and the European football championships kicking in plenty of cash - all in the context of a hoped-for healthy US economy (current credit crunch not withstanding). But Sir Martin didn't go out of his way to say that the UK would make any specific progress against the other, much stronger markets.

Even if we integrate ITV predictions about more robust UK ad revenue growth going forward into Q3 and beyond, you still have to say the picture looks overcast at best.

Sir Michael Grade did his best a fortnight ago to pump up the hopes of the whole TV and radio ad industry with good third-quarter predictions about the strength of ITV.

He also committed to fight to repeal or at least modify the contract rights renewal agreement and ITV was boosted by a Merrill Lynch upgrade from sell to neutral in the days following its forecasts. But ITV's share price is still hovering around 106p and it certainly wasn't helped when the other Sir M took to the media spotlight with a less optimistic performance.

How will Virgin Media boss Steve Burch be remembered?

Haven't we all wanted to be a member of a select club? I once thought that Ex Heads of the UK Cable Industry was one such society. However, the sudden return to the US of Virgin Media chief executive Steve Burch underlines that EHUKCI (pronounced Yucky) is neither small nor select.

I've lost count of the number EHUCKI members there have been (many parachuted in from the US with little knowledge of the UK) and Burch - an American who formally headed a regional division of US cable giant Comcast - lasted just 19 months.

Not only is there a revolving CEO door at VM, but all CEO alumni get massive pay-offs. Burch already collected £5.6m in stock and cash last year and has bagged a walkout deal of £3.5m. His predecessor at VM, Simon Duffy, left with almost £2m while the man who put NTL into bankruptcy, Barclay Knapp, pocketed about the same in 2003 when he walked the plank.

The VM statement about Burch's departure said he left for "personal and family reasons" but confirms he has left with immediate effect. With no replacement boss in the wings, this is another example of VM looking anything but focused and committed.

How will Burch's time at VM be remembered? Not too gloriously perhaps. He decided to go into battle with Sky over its basic channels exactly when the rebranding of VM needed to be shouted from the rooftops, and the company's marketing propositions were undercut by his rivals, from Sky to Carphone Warehouse.

On top of all that, the current global credit crunch has, momentarily at least, scuppered a lucrative sell-off to a private equity firm. At least no one can blame Burch for that.

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