(Refiles to correct verb in second paragraph)
* Broadcaster's earnings rise 3 pct
* Ad revenue declined in 2016, seen 6 pct down in early 2017
* Programme making helps to offset impact of ad weakness
By Paul Sandle
LONDON, March 1 British broadcaster ITV
said a strong performance from its programme making business
helped it to weather the first decline in advertising revenue
ITV, which broadcasts long-running soap opera "Coronation
Street" and police drama "Broadchurch", said advertising revenue
was likely to fall six percent in the first four months of 2017.
ITV Chief Executive Adam Crozier said traditional TV spot
advertising now accounted for less than half of ITV's revenues.
Investment in production to diversify its revenues had paid
off as the company reported a better-than-expected 3 percent
rise in adjusted annual earnings per share.
Crozier said the weak advertising market would persist early
"If you look at the categories that's coming from,
predominantly it's food, and FMCG (fast-moving consumer goods)
and retail," he told reporters on Wednesday.
"A lot of the marketing support there at the moment is going
into supporting price cuts given the levels of inflation that
are coming through in that market."
ITV reported earnings per share of 17 pence, beating market
forecasts of 16.3 pence, on total external revenue up 3 percent
to 3.06 billion pounds in 2016.
Shares in ITV, which have recovered most of their losses
since the EU referendum in June, were trading up 2 percent at
PREDATOR OR PREY?
There was a "healthy pipeline" of acquisition opportunities,
Crozier said, although Entertainment One, the Canadian
company ITV tried to buy a last year, was not one of them.
"We have no interest in pursuing Entertainment One," he said
of the company behind Peppa Pig.
ITV has long been mooted as a bid target itself, with cable
TV giant Liberty Global, which owns nearly 10 percent,
seen as one of a number of potential buyers.
Crozier said ITV was a consolidator in the market, and its
strategy was aligned with the industry trends towards scale and
diversity of revenue stream.
"I accept within that as I look around at other industries,
partly as a result of exchange rates and other things, UK
companies do look cheaper, better value," he said.
"I have always been of the view that the best form of
defence is attack, which is to keep driving the company
ITV said it would pay just over 200 million pounds to
shareholders in the form of a special dividend of 5 pence on top
of a final dividend of 4.8 pence.
Analysts at Citi said the special dividend had not been
widely expected and that the cash return signaled confidence in
(Editing by Keith Weir)