Not the trend you want to be showing as you work towards an IPO: In its Q1 ended March 31, Current TV had ad revenue of just $2.5 million, a decline from $2.64 million in the year-ago quarter, according to an amended S-1 filing. Total revenue for the quarter was up 23 percent, helped by growth in distribution revenue. Ultimately though, the Al Gore-backed cable network needs to show improvement on the ad side. It even identifies this as a key issue going forward: “We generated approximately 16% and 15% of our revenue in 2007 and in the three months ended March 31, 2008, respectively, from advertising fees, and our business model contemplates that over the longer term the majority of our revenue growth will be derived from advertising.”

SEE ALSO: Gore-Backed Current TV Files For $100 Million IPO; $63.7 Million 2007 Revs; Losses Mount

Meanwhile, though revenues grew overall, losses expanded in the quarter. Net loss came to $7.5 million compared to $2.9 million a year ago. Across the board in sales and marketing, production and general and administrative, costs were up big year over year.

The filing doesn’t specifically say what led to the drop in ad revenue, but it does hint at some operational issues. Among them: A young advertising sales team that’s having a hard time selling its inventory to wary advertisers. It also mentions some issues relating to user-gen media and user-gen ads, but ultimately the name of the game is viewership: “Historically, new television networks have received negligible ratings in the first several years in which they are rated. If we become rated and receive negligible ratings, advertisers may be less interested in sponsoring our content or paying rates consistent with our expectations, and our business, operating results and financial condition could be adversely affected.”

As for the balance sheet, it has cash on hand of just $6.1 million and debt of around $41 million; that’s up from $36 million at the end of last year. It looks as though its debt will have to expand to continue financing operations at this rate. In this market, this could be a tough IPO to pull off.