Hyde sale squeezes Scottish TV profits

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Scottish Television yesterday announced sharply lower profits for 1994, earning a meagre £2m after a one-time accountancy charge of £7.5m relating to the disposal of its loss-making outplacement agency, Pauline Hyde & Associates. The result compared with £12.6m last year.

But analysts said STV, the independent company that holds the licence for central Scotland, may have finally put its financial troubles behind it, coming off a year of special circumstances that are unlikely to be repeated.

Its future ownership, however, may be less certain. STV confirmed that it had held "amicable" discussions with executives from the newspaper publisher, Mirror Group, which owns 19.9% of Scottish, regarding possible joint ventures. However, no board representation would be offered to Mirror Group, despite several requests.

"It is the unanimous view of the board and our advisers that it would be inappropriate to discuss the future of our media alliances" in the presence of Mirror Group board members, STV's chief executive, Gus Macdonald, said.

"We clearly do not subscribe to that view," a Mirror Group spokesman said last night. "But we feel we can proceed in partnership. As long as we can continue to work together, we won't be pushing too hard [for board representation]. If not, then we shall of course push very hard indeed."

It is thought that Mirror Group would raise its stake if the Government relaxed the rules restricting cross-ownership of media, as many in the business have been requesting and as the Government is now considering. A Mirror Group spokesman said that "30 per cent would be more satisfactory than 20 per cent, but not completely satisfactory."

Mirror Group also has a 27 per cent stake in Newspaper Publishing, which publishes the Independent.

Mr Macdonald also confirmed yesterday that meetings between STV executives and Janet Street-Porter, head of Mirror Group's fledging television project, may lead to a deal whereby STV would produce two to three hours of television in Scotland for Mirror Group, perhaps by 1996.

"In any joint projects, much depends on how the Government sees the future for deregulation," Mr Macdonald said. While he was positive about the prospects of working with Mirror Group, Mr Macdonald and the finance director, Andrew Flanigan, hinted that a full bid for STV, if allowed by new legislation, would be unwelcome.

"While changes in the cross-ownership rules are an attactive possibility, there are some real public policy issues," Mr Flanigan said, alluding to Mirror Group's already signficant share, through its Scottish publishing holdings, of the regional advertising market.

The shares dropped to 394p in trading yesterday, but recovered to close at 406p, down 2p.