UK media companies face a tough 2001 as dot.com advertising goes into freefall, according to analysts.

The European media team at ABN Amro have cut their stance on the sector to "reduce", due to the dramatic downturn in the US economy and a fall in advertising revenues from cash-strapped start-ups.

"The economic environment appears to be rapidly deteriorating in the US in particular, and the troubled hi-tech and automotive sector will contribute to lower advertising growth," said the note.

However, UK firms will bear the brunt of the slump in advertising growth, with ITV giants Granada Media and Carlton Communications set for negative advertising revenue growth in the first half of the year.

The ABN note added that the UK TV market should "just about" hold its share of the advertising market in 2001.

"The slowest of the major European markets is set to be the UK, where GDP growth is likely to be the slowest and the dot.com boom had most effect in 2000," the note said.

ABN predicted that UK dot.com advertising will show negative growth of -0.5% for 2001, contributing to a drop in advertising growth from 8.5% in 2000 to 5% for the next 12 months.

The media sector's exposure to the advertising market is dangerously high, with ABN calculating that 50% of its revenues were advertising-related.

Such is the media team's concern for the sector, its one remaining company on the "buy" list is Luxembourg-based satellite operator Societe Europeene des Satellites.