Bottom Line: Coloured television

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The Independent Online
YORKSHIRE-Tyne Tees has provided proof, if any were needed, of the unsustainability of television company share prices.

News that, instead of profits of pounds 4m-6m, the group faces a loss of indeterminate proportions this year left the shares only 4p lower at 172p. The revelation of the losses initially had a much bigger impact - but before long the bulls were in scenting a 'buying opportunity', pushing the price back up. The trouble is that they are not punting on the company's prospects but on the likelihood that come January, Peter Brooke, the heritage secretary, will relax ownership restrictions on the television sector and Granada will swallow its smaller rival. Nor is Yorkshire alone; most of the smaller TV companies are equally speculative flutters at these prices.

Yet as underlying businesses they look less than robust. Things will be bad enough if the ownership restrictions are lifted and the industry contracts into four or five big groups. Even then the accounting practices rife in the industry - witness Yorkshire - should concern shareholders.

Few businesses give their management more scope for conjuring profits out of thin air than advertising sales, though sooner or later the practice ceases to be self- sustaining.

But as small stand-alones, many of which paid too much for their franchises, groups like Yorkshire are poor investments. While there are gamblers who will bet on anything, Mistress Bee in the one o'clock yesterday at Haydock Park would have given those in search of a flutter a better run for their money.