Everything seems to be going Granada's way. Media profits were up by more than a quarter, driven by rising ITV advertising spending and the benefits of fully integrating Yorkshire-Tyne Tees. Investment in Little Chef and refurbishment of the Forte Travelodges also paid off with a 25 per cent profit hike. Hotels advanced 15 per cent while even the 15 per cent drop in Rentals was less severe than expected.
In the short term, these trends should continue. But Granada faces a few long-term challenges. British Digital Broadcasting, its television joint venture with Carlton, is going to slurp up pounds 200m of Granada's cash while the uncertain payback is at least three years away.
There are also question marks over the hotel cycle, which is nearing its peak, and growth potential in the roadside businesses in the face of the government's crackdown on cars.
Granada chairman Gerry Robinson could always pull another deal out of the hat. But he does not seem to have any major tricks up his sleeve. A mooted alliance with hotel chains in the US or Asia will hardly set pulses racing. Demerging the media side is off the agenda for now. And an acquisition in contract catering - the favoured area for expansion - would have to overcome the high price attached to most targets and Granada's skimpy interest cover.
So what kind of rating does Granada deserve? Paribas has pencilled in profits of pounds 734m, putting the shares, which slipped 45p to 1138p yesterday, on a forward p/e ratio of about 20. In line with the market but, for now, high enough.