Breakfast TV's winner may be a pounds 20m loser
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Your support makes all the difference.GOOD Morning Television, which starts broadcasting in the breakfast slot on ITV from 1 January, is expected to lose as much as pounds 20m in its first year and may not break even in its first five years.
The group, which is backed by Carlton Communications, LWT, Scottish TV, Walt Disney and the Guardian and Manchester Evening News group, bid pounds 36.4m a year, in 1991 prices, to secure the franchise from TV-am, which made a bid more than pounds 20m lower.
At the time, Bruce Gyngell, the Australian chairman of TV- am, predicted financial disaster for the new early morning service and said it would be out of business within 18 months. Although he later retracted his words, the latest estimates of advertising revenue and costs from independent media experts indicate that his predictions might come true.
James Capel, the stockbroker, has estimated that even if GMTV achieves its projected business plan for an increase in advertising revenue in its first year compared with the last year of TV-am, it will lose pounds 4m.
Capel estimates that it will continue to lose money until 1996, when it will start to make a modest return on the investment by its five backers.
The scenario gets worse, however, if the forecast by Zenith, the media buying group owned by Saatchi & Saatchi, comes true.
Zenith believes that GMTV's programme mix and advertising sales team will not be able to achieve the same sales as TV- am's well-regarded team, which is concentrating its attention on selling airtime for Britsh Sky Broadcasting.
Zenith estimates that GMTV will only sell pounds 60m worth of advertising in its first year, a pounds 20m shortfall on its business plan. This estimate is based upon a 15 per cent fall in GMTV's audience share, as compared with TV-am's.
Guy Lamming, an analyst at James Capel, said that if Zenith's projections are correct, then GMTV's first-year losses will exceed pounds 20m.
Unless matters improve drastically, GMTV is unlikely to make a profit in the forseeable future without a dramatic rationalisation of its businesses, which could jeopardise its commitments to the Independent Television Commission on the quality of its programming.
Although GMTV shows a confident face to the public, and its chief executive, Christopher Stoddard, has a reputation for frugality, senior executives are privately worried about the group's finances.
'We are a little anxious that our investment in the group will not make a decent return,' said the chairman of one of its backers recently.
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