The Week Ahead: BA profits set to fall to earth but Murdoch Jnr reaches for Sky

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The Independent Online

Not so long ago, the appointment of James Murdoch as chief executive of BSkyB caused uproar. Now, nearly 18 months down the line, investors are predicting good things from the 33-year-old son of Rupert.

Not so long ago, the appointment of James Murdoch as chief executive of BSkyB caused uproar. Now, nearly 18 months down the line, investors are predicting good things from the 33-year-old son of Rupert.

Mr Murdoch Jnr's new marketing strategy for the pay-TV specialist, including a fresh advertising campaign, moved up a gear before Christmas and the expectation is that Wednesday's interim numbers will reap the benefits. Analysts are looking for subscriber numbers to have increased in the past three months by between 105,000 and, at the most optimistic end of the range, 180,000. Price increases should also help the results, while "churn", the rate at which subscribers quit the service, is thought to have remained steady.

With Christmas behind us, the attention will also be on plans for the rest of the year and further initiatives to keep subscriber numbers strong outside the festive season. The return of cash to shareholders and the product mix will catch the City's interest too.

Elsewhere, two airlines from either end of the spectrum are publishing numbers: British Airways and Ryanair. Analysts are mixed in their predictions for BA and pre-tax profit forecasts range from £30m to £73m, against last year's £125m. The carrier will probably blame high fuel costs for the decline.

BA is also likely to face questions about smaller airline BMI, after it emerged last week that Lufthansa, a 30 per cent shareholder, was looking to sell its stake. Both BA and rival Virgin Atlantic are thought to be fans of BMI and, so the logic goes, would be interested in snapping it up. However, it is understood that while Lufthansa has held conversations with BA and Virgin, both have ruled out a deal. The sticking point is that unless BMI's chairman and majority shareholder, Sir Michael Bishop, also sells up, there is no point buying a minority stake - and so far, Sir Michael hasn't indicated a willingness to sell.

Meanwhile, shares in low-budget rival Ryanair, listed in Dublin, have enjoyed some recent uplift in anticipation of a solid set of third-quarter results. Management has been in a buoyant mood and yields appear to be ticking up. However, just as at BA, fuel remains an issue, particularly as Ryanair does not hedge against changes in the oil price.

Another busy sector is telecoms, where companies will have their final say on the future of BT when the deadline for submissions to Ofcom's regulatory review of the industry rolls around on Thursday.

Ofcom has already warned that it is prepared to get tough on BT if it abuses its dominant market position, and its rivals are taking up the cudgels. "For too long, BT has effectively stymied progress towards full competition and this era must now come to an end," says David McConnell, the chairman of UKCTA, a trade body representing telecoms companies such as Cable & Wireless, One.Tel and Thus. "The British economy and British consumers demand nothing less. The ball is with BT. We are watching very closely how it will play the game."

Staying with telecoms, and mobile phone operator mmO 2 gets its long-awaited 3G service off the ground in the UK this week. The group is hoping that the service - although not complete as its network covers just a third of the population - will help boost demand.

Into more traditional industries, and mining giant Rio Tinto releases final results. They are unlikely to contain any big surprises following a robust fourth-quarter production update earlier this month. Net income is expected to surge by around 70 per cent to $2.35bn (£1.25bn), bolstered by the record strength of prices for commodities such as alumin- ium and copper.

There will also be a number of trading updates during the week, from insurer Friends Provident through to cigarette group Imperial Tobacco and directory specialist Yell. Overseas, US investors will see results from the likes of Exxon Mobil, Walt Disney, Anheuser-Busch, the world's largest brewer and owner of Budweiser, Google, PepsiCo and Time Warner.

Economic news will be focused on interest rates. The European Central Bank is ex- pected to leave rates on hold, at 2 per cent, but the Federal Reserve is predicted to raise the cost of borrowing for Americans by a quarter point to 2.5 per cent. Of interest to both institutions will be Opec's meeting today in Vienna, where most are hoping that planned production cuts will be deferred.

Other, domestic, economic news should include the Halifax house price index for January, consumer confidence data, the CBI Distributive Trades Survey and an update on the manufacturing sector.

CALENDAR

Tomorrow 31 UK: Results: (final) IDN Telecom, TEG Environmental; (interim) Avingtrans, Filtronic, Honeycombe Leisure, Minco, Northern Recruitment, NWF, Quadnetics.

Tuesday 1 UK: Results: (F) Amvescap, Cosalt, Kensington, Quantica, XP Power; (first quarter) BOC, Epic; (second quarter) Surfcontrol.

Wednesday 2 UK: Results: (F) Autonomy Corp, Orca Interactive; (second quarter) BSkyB.

Thursday 3 UK: Results: (F) Rio Tinto, Shell, Smith & Nephew; (I) Caffe Nero.

Friday 4 UK: Results: (F) Partridge Fine Arts; (third quarter) British Airways.

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