City File: VAT worries

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THE prospect of VAT being imposed on newspapers, magazines and books in the March Budget has put the jitters under much of the media sector.

The measure would raise about pounds 1bn for the Government, but Neil Blackley, media anaylst at James Capel, estimates the measure could cost the sector about pounds 250m of its annual turnover.

According the Blackley, the worst affected company would be Mirror Group Newspapers, where nearly two thirds of its revenues come from actual sales rather than advertising, which already is subject to VAT.

Also heavily exposed is Emap, where half the revenues come from sales of its magazines and newspapers, the Telegraph, which derives just under 40 per cent of its income from sales, and Daily Mail & General Trust, where about a third of turnover would be affected.