Granada hints at spin-off of its media interests interestsprofits rise

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The Independent Online
GRANADA, the ITV broadcaster, hotel and restaurant operator, yesterday indicated that it is moving towards a spin-off of its media interests, even though Gerry Robinson, the chairman, said there was no timetable for the move.

"I would be surprised if you looked 10 years down the road and we weren't part of a large international media grouping," Mr Robinson said. "The tendency to internationalisation is definitely there."

BSkyB, of which Mr Robinson was chairman until last year, has long sought a way to expand in Europe. More recently, its News Corp parent has made opening moves to expand into Italy and Germany.

Mr Robinson has foreshadowed the group's demerger before, but now seems more anxious to execute one last bumper deal, perhaps rivalling Granada's hostile pounds 4bn takeover of Forte in 1996.

"Clearly, if there were an opportunity to link up with an international media group - or if there was a chance to buy a large leisure operator - we would look at it," he said.

The comments came as Granada fulfiled its aim of growing earnings by a double- digit percentage amount. Pre-tax profit on ordinary activities in the six months to March rose 13 per cent to pounds 315m. Sales grew 5.8 per cent to pounds 1.98bn.

Mr Robinson said soft business conditions early in 1999 have given way to a "strong and improving trading environment". He added: "I believe that is proof of a soft-landing."

It emerged that ONdigital, the television company that Granada and Carlton jointly own and which had 110,000 subscribers in the four months to March, gave away 8,000 digital set-top boxes on 28 May - the first day the decoders were offered for free.

Since then, demand on some days has surpassed that figure, company executives said.

Charles Allen, chief executive of Granada, predicted that digital TV will see exponential growth similar to the recent boom in mobile phones.

"The shift to digital TV will be faster than people think," he said.

Restaurants, featuring Little Chef and contract food services, showed the strongest growth in the half as operating profit climbed 15 per cent to pounds 115m as sales rose 15 per cent to pounds 834m.

Hotels, despite a flat performance from London signature properties, grew operating profit 8 per cent to pounds 132m as sales gained 4.4 per cent to pounds 477m.

The media division saw operating profit grow 8 per cent to pounds 122m even as sales fell slightly to pounds 483m. But the company is taking solace from a rebound in viewership to a peak-time share of 41 per cent, while sales from programming commissions grew 12 per cent in the first-half and are expected to advance by near 20 per cent in the second half.

Granada will also undergo a 2-for-1 share split and pay an interim dividend of 5.9p, up 15 per cent from a year ago. The shares closed down 21p at 1294p.

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