UTV has reported difficult conditions in the television advertising market, warning that revenues in the area will be down by 3.5 per cent in the second half of the year.

The company, which has media interests in the Republic, England and Northern Ireland, said the television market "remains difficult". However, trading in other divisions is broadly in line with expectations.

The company said that, while returns from television would be down, this would be partly mitigated by cost savings elsewhere. The comments are included in a trading statement from the company, which is listed in both London and Dublin.

On June 6th, UTV took operational control of Wireless Group, which it acquired for £97 million (€143.2 million). This group contains one national UK station, Talksport, and 16 independent local stations.

UTV said cost synergies had been implemented which should yield £1.5 million in the first full calendar year of ownership.

While the British market continues to struggle, UTV said that advertising revenue from its Irish radio stations was enjoying good growth and should be up 16 per cent in the second half.

The company expects to write off costs of about £600,000 during the period, including pre-operational expenditure of £400,000 connected with a new station in Belfast, which was launched on November 14th.

It said strong revenue growth of at least 50 per cent should be achievable in new media.

UTV chief executive John McCann said: "We are very pleased with the performance of UTV Radio, especially Talksport, where revenues are well ahead of last year. With the World Cup in 2006, we anticipate continued growth at UTV radio and we look forward to the launch of Talk 107 in Edinburgh on February 14th."

UTV is trying to expand across its three markets, although it is anxious to bed down the Wireless Group. Expansion in the Republic is constrained by a Broadcasting Commission of Ireland (BCI) cap on the number of radio stations any one company can own.

Goodbodys analyst Neil Clifford said the group's Irish radio business continued to deliver very strong growth and was expected to be up 16 per cent during the second half of 2005, which was ahead of expectations.

"Such momentum should be maintainable all the way through 2006, given the very positive economic backdrop that will exist in Ireland during the SSIA release," he said. Goodbodys act as UTV's Dublin brokers.

"At the interims, the company noted that its television business, while continuing to outperform the ITV network, would be down during the second half. At this stage, television revenues are likely to be down by 3.5 per cent during the second half of the year, which is marginally worse than we had expected," he added.