The slumping Hong Kong retail sector has been blamed for a drop in first-half profit at Television Broadcasts (TVB), as advertising revenue fell sharply, the company says. Hong Kong's largest television company reported a 5.8 per cent fall in attributable profit to $177.96 million, largely due to shrunken advertising margins in the first quarter, it said. 'Growth has been constrained by a sluggish local economy and a correspondingly depressed advertising market,' the company said. TV advertising rates came under pressure as weak consumer demand slowed retail sales, causing advertisers to hold back from signing new quarterly contracts at the end of last year. Instead, many advertisers rolled over their existing contracts into the first quarter of this year, putting margins under pressure, analysts said. Earnings per share fell to 42 cents against 45 cents last year. The interim dividend was unchanged from last year at 20 cents. 'We see early signs of recovery in the Hong Kong economy,' TVB said. However, any upturn would have a minimal impact on company revenues, it said. TVB has suffered lean times since Hong Kong's domestic economy began to lose altitude in 1994, causing a 24 per cent decline in net profit last year. Second-half advertising revenues should improve with a brighter retail environment, but earnings growth for the year is unlikely to be much above 11 per cent, an analyst at a British securities house said. Revenues from its overseas operations began to register with its Taiwan cable joint venture, TVBS, making a significant contribution for the first time. TVBS is estimated to have earned about $30 million in the first six months. But any significant turnaround will unlikely come about until next year when revenues from joint ventures in India and Indonesia should contribute to earnings, the analyst said. TVB is the largest producer of Chinese language programming in the world and has embarked on a programme of regional joint ventures to diversify earnings from its home market of Hong Kong. Start-up costs for these regional ventures are not expected to be large.