Granada seeks early float to fix market value of ONdigital

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The Independent Online
GRANADA, the media to hotels group, is pushing for an early flotation of ONdigital in an attempt to put a firm valuation on the fledgling pay- television venture.

Granada is understood to want to examine the possibility of floating ONdigital in 18 months' time. The company is likely to push for the issue to be discussed by ONdigital's board before the end of the year.

Floating ONdigital would help cement the value of the venture, 59 per cent earned by Granada and Carlton, the media group run by Michael Green. City analysts are divided about ONdigital's value, with estimates of its worth ranging from pounds 250m to as much as pounds 1bn.

ONdigital, which launched its 30-channel service in November, has been battling with British Sky Broadcasting, the satellite television group, in the race to sign up subscribers to digital television.

Details of ONdigital's performance are a close secret, but its shareholders expect it to have signed up 350,000 subscribers by the end of the year.

BSkyB will next week update the City on the performance of its digital service when it issues half-year results. However, ONdigital is thought unlikely to issue an update before May.

Charles Allen, Granada's chief executive, is understood to be interested in floating the minimum 20 per cent stake allowed by Stock Exchange rules. Shareholders may also want to capitalise on the soaring valuations attached to hi-tech stocks by seeking a dual listing on Nasdaq, the US exchange.

Carlton and Granada have budgeted a total investment of pounds 375m for ONdigital over the next five years. The venture will break even when it has two million subscribers.

The flotation of ONdigital has been under consideration for some time. Last year Morgan Stanley, the investment bank, was retained to examine the possibility of a float. However, ONdigital is not currently thought to have retained any financial advisors.

If Carlton and Granada decide against an early float, they are likely to wait until 2003 when the business has been up and running for five years.

Meanwhile, Granada yesterday indicated that ITV had increased its share of television advertising revenue since the beginning of the year. Steve Morrison, chief executive of Granada's media division, said ITV's advertising revenues in January grew by 11 per cent on the same month last year. In 1998 ITV's advertising revenues grew by a total of 4.8 per cent.