ULSTER Television (UTV) is positioning itself for an aggressive assault on the Republic's market in a drive to win a greater share of advertising revenue. It is understood that the company will announce its plans in this regard next month.

Increasingly, advertisers see the medium of television as an all-Ireland advertising market, according to Mr Desmond Smyth, UTV's managing director. "We believe the market will continue to grow and we can gain more business," he says.

The company is also seeking ways to increase its penetration in the Republic from its current 80 per cent to almost 100 per cent. And in May it will launch a digital channel although this will not be generally available for some time.

UTV announced its annual results this week, posting a 13.3 per cent rise in operating profits last year to £8.3 million sterling (€12.17 million), compared to £7.3 million in 1997. The figures show just how important the Republic is for the station which relies almost exclusively on advertising revenue for its income.

Last year, advertising revenue from the Republic amounted to about £7.2 million sterling. This has been growing steadily in the 1990s.

"People often make the mistake that it is because UTV is available in the Republic that advertisers use us, but they advertise because they view the market on an all-Ireland basis," he says.

Mr Smyth acknowledges that TV3 will have some impact on revenues. The effect last year was negligible as the new station was only trading for three months. "They will compete with us for advertisers with all-Ireland budgets," he says, "but primarily the competition is with RTE."

Overall, advertising at £36.1 million, added to sponsorship revenue (£600,000) and mixed trading revenue of £500,000, was up 7 per cent on 1997.

Although potential rivals, UTV and TV3 have agreed to co-operate on "operational matters where it is mutually beneficial", Mr Smyth says. This will probably include exchanging news and programming commissions. "However, we have to bear in mind that we are competitors," he says. "It is our view that with the advent of digital television all indigenous channels will be accessible to everybody on the island - possibly within three years."

UTV's potential involvement with TV3 ended in 1996. It wanted to invest in the new independent television station, but was unable to agree with the Independent Radio and Television Commission (IRTC) on the extent of this involvement. Mr Smyth said UTV was to control 60 per cent of the new station. The IRTC was concerned about this. "We took the view that it was an important investment and we wanted control of it," he says.

Mr Smyth says UTV has no plans to become further involved with TV3. The station's place was taken by Can West, a Canadian television consortium, which also holds a 29.9 per cent stake in UTV. He sees no conflict in this - one investor being involved in two competing stations. "They are taking a medium to long-term view of their investment," he says.

Although UTV and TV3 are looking at operational links, the relationship between UTV and RTE is somewhat strained. Last year UTV threatened legal action against the Republic's State broadcaster if it attempted to boost its signal into Northern Ireland. RTE is currently received by only 30 per cent of homes in the North, due entirely to signal overspill. Improvements in the transmitter at Cairn Hill, Co Louth, will enable 70 per cent of homes in the North to receive RTE, Mr Smyth says.

UTV's argument is that RTE would be in breach of copyright, especially in broadcasting Coronation Street into the North where UTV has the rights. Cabletel, the US-owned cable group is currently cabling the North, but has decided not to offer RTE as part of its service until the issue is resolved.

Mr Smyth admits the issue "is difficult for us. We are seen to be blocking RTE whereas we are probably the most enthusiastic proponents of broadcasting across the island".

He says UTV wants some plan, or framework, drawn up for extending broadcasting across the island. This will involve talks with RTE and also with cable companies.

He says UTV has exclusive rights to Coronation Street in the North, where it is regularly watched by up to 600,000 people per episode. "We have a very valuable asset and if we are to give it up we want something in return."

In the long term UTV wants what Mr Smyth calls "security of tenure" - some way of ensuring that it can reach an all-island audience without fear of something going wrong, such as being taken off service by a cable company. For example, he says, if your signal is received by a person using an aerial, then you have security of tenure, but if you are received via cable, you do not.

"We have no control over distribution in the Republic and that is something that needs to be developed. If you are building a long-term business you need to have control over distribution," he says.

Mr Smyth has been in control of UTV since 1983, having been appointed company secretary and financial controller in 1976. Those familiar with him describe him as cautious and thoughtful. An accountant by training - he worked with Coopers & Lybrand (now PwC) - and has overseen the successful development of UTV in recent years.

THE station, which broadcasts programmes from the British Independent Television network, but has its own opt outs, has achieved the highest audience figures of any ITV network station for six years in succession. UTV spends around £4 million a year on programme-making - not including payroll costs.

Mr Smyth believes that UTV has the balance right between offering its own regional and ITV programmes. "We have access to £600 million worth of programme making from ITV," he says. "We don't want to move away from that."

UTV faces competition from several sources, including the BBC, but also from BSkyB. Mr Smyth believes UTV's unique customised approach, through its news, current affairs and other local programmes, gives it a competitive edge.

In May it will launch its digital channel which he predicts will be a slow earner. Although the set up costs are small, the station is forecasting a £600,000 deficit for the first year. However, Mr Smyth says the station opted to establish its own independent digital channel because long term, it has huge potential.

Initially the station will run repeat programmes. As the audience builds - and this will depend on the ability of customers to receive digital broadcasts - UTV will examine revamping and relaunching it.

UTV's strong financial performance over the years means it has amassed a virtual embarrassment of riches. It announced this week it would pay shareholders a special dividend of 35p per share. This will cost £18.4 million and reduce its cash hoard to £6 million.

Is it not strange that a media company would reduce its reserves rather than reinvest or seek new projects in which to invest? "Our core business is programme-making and broadcasting," says Mr Smyth. "We are not interested in owning newspapers or investing in radio stations."

He says the right opportunity has not come along, although UTV will naturally evaluate any that may do so.

Mr Smyth says the company has no debt and would probably avail of low interest rates to borrow money if something turned up, rather than seek to raise funds through a share issue. However, he says, there is nothing imminent.