Mirror Group profits reach all-time high

Mirror Group, the newspaper publisher, yesterday all but ruled out a takeover of Scottish Television, in which it has a 20 per cent stake, even if media ownership rules are relaxed under a new Labour administration.

"It would be difficult to acquire STV because we would then have an interest in all the number one media brands in Scotland," said David Montgomery, the Mirror's chief executive. "Clearly questions would be raised about a monopoly situation."

Mirror Group owns the Daily Record, the best-selling tabloid in Scotland, while STV's pounds 120m purchase of Caledonian Publishing included the Herald, Scotland's leading broadsheet title. Under the Broadcasting Act newspaper publishers such as Mirror Group and Rupert Murdoch's News Corporation, which have more than 20 per cent of national circulation, cannot increase their interest in ITV companies.

"The 20 per cent will change but it won't affect our strategy," Mr Montgomery said.

He was speaking after Mirror Group reported a 6.6 per cent rise in pre- tax profits before one-off items to a record pounds 82.2m on sales 7.3 per cent higher at pounds 537.7m. Earnings per share before exceptional items rose 6.7 per cent to 14.3p while the dividend was increased by 12.5 per cent to 4.5p.

"Mirror Group profits have achieved an all-time high, despite predatory price competition and substantially increased newsprint costs," Mr Montgomery said.

The group's flagship Mirror newspaper is Britain's second-top selling tabloid, behind Mr Murdoch's Sun.

Losses from the fledgling L!ve TV cable channel fell by almost 17 per cent to around pounds 8m. Mirror Group plans to increase the number of city TV stations to seven by launching in Manchester, Glasgow and Newcastle later this year. L!ve TV is expected to break even in a couple of years.

Mr Montgomery said Mirror Group had no plans to sell its 46 per cent stake in Newspaper Publishing, the company which produces the Independent and Independent on Sunday titles.

Newspaper Publishing reduced its operating losses by 43 per cent to less than pounds 6m. Taking into account a management contract with Newspaper Publishing, Mirror Group said its investment was breaking even.

Mirror Group made an exceptional gain of pounds 19.4m in 1996 from the resolution of several property-related issues and the sale of STV's stake in fellow regional broadcaster HTV.

An exceptional tax credit of pounds 9.1m was included in the 1996 accounts after a settlement was reached with the Inland Revenue on corporation tax payable for 1991-1994.

"The group is in a good financial position to make prudent investments for the future," Mr Montgomery said.

Shares in Mirror Group closed 7p lower at 209.5p.