British commercial television broadcaster Granada has unveiled a dip in pre-tax profits for the full financial year, and has said the outlook for 2003 remains unclear.

We now have a clear vision for the future: One ITV company, with one management

Granada executive chairman Charles Allen

The company said on Wednesday that profits before taxes and one-off costs for the year to late September came in at £176m ($275m), 10% lower than the previous year, but ahead of analysts' forecasts.

But after costs and financial charges - including a £250m writedown to reflect a decline in the value of its digital broadcasting interests - the company crashed to a pre-tax loss of £164m, compared with a profit of £46m last year.

Granada, which runs the UK's ITV television network with Carlton Communications, has been hit by a sharp downturn in advertising revenues.

Both ITV firms have also been affected by the hefty costs of subsidising their now defunct subscription TV service ITV Digital.

Ad sales up

Granada held out the prospect of a recovery in the advertising market, saying that while ad sales fell 4% for the year as a whole, they had risen 5% between March and September compared with the previous six months.

The news tallied with upbeat figures from Carlton, which on Tuesday said ad revenues had risen 2% during the second half of its financial year.

Granada remained cautious with regard to next year, saying it did not have "any visibility" for revenues in 2003.

But Granada executive chairman Charles Allen said the company was on the road to recovery, adding that a planned merger with Carlton - announced last month - would strengthen ITV's position.

"At the end of the first half I said that the ITV fightback starts now - we've had a good first round," he said.

City uncertain

"We now have a clear vision for the future: one ITV company, with one management and one focus to build a stronger ITV for our viewers, advertisers and shareholders."

The Carlton/Granada merger, which would create broadcasting giant controlling an estimated 50% of the UK television advertising market, still has to be cleared by UK competition watchdogs.

In the City, Granada shares initially fell before clawing their way back to 86.25p, 1.25p up on the day, by mid-afternoon.