LWT shows 8.9% rise in underlying profits

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The Independent Online
LWT Holdings, the television company, yesterday declared an 8.9 per cent rise in its underlying profitability, showing the benefit of achieving a similar increase in its net advertising revenue.

Pre-tax profits for the first six months of the year showed even more impressive progress, but the rise from pounds 9.8m to pounds 13.7m was largely attributable to the pounds 2.8m fall in the levy that LWT had to pay to the Exchequer.

Christopher Bland, chairman, said 'the most real line', profits before both the levy and interest, rose from pounds 20.8m to pounds 22.7m.

LWT benefited as London won advertising share from the provinces and the company itself won share at the expense of Thames, the weekday broadcaster. LWT's share rose to more than 12 per cent, which Peter McNally, finance director, said was the highest for more than 10 years.

Mr Bland said LWT expects to hold its own or lose some of its share to Thames during the second six months: 'We can't go on building shares.'

LWT described its results as good in difficult trading conditions. Mr Bland and Greg Dyke, managing director, said the business was becoming increasingly short-term, with advertisers booking airtime only shortly before transmission.

'It's always been a short-term market in terms of other businesses,' said Mr Bland. 'It's now short-term in terms of itself.'

Mr Bland and Mr Dyke can expect to become millionaires several times over next year when management can exercise their rights under LWT's controversial incentive scheme.

They expressed grave doubts about the ability of the proposed Channel 5 to raise the pounds 150m or so it needs to get off the ground. Mr Dyke said: 'We and Granada did our own study on Channel 5. We reckon the figure (for necessary funding) was closer to pounds 350m and still we could not see any way of getting a return.'

LWT retained its franchise in last year's auction with the low bid of pounds 7.6m, its sole competitor failing on quality criteria. When the new licence period begins next January, instead of the current Exchequer levy LWT will pay pounds 7.6m plus 11 per cent of its advertising and sponsorship revenue.

LWT paid a dividend of 1.969p a share to holders of its preference share and management shares on 30 June.