PolyGram stuck in the groove

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PolyGram, the music and film giant controlled by Philips, yesterday underlined the sluggish state of the music business worldwide, unveiling first-half net income stuck at about 272m guilders (pounds 105m). But the results still exceeded analysts' expectations and helped raise the shares of London- listed competitor Thorn-EMI, which reported mixed quarterly figures on Monday.

Analysts also cheered comments by Alain Levy, PolyGram's US-based president, who said the normally stronger second half would benefit from a better release schedule of potential hits and higher results from the film business.

Sales were up 7 per cent year on year in the half, touching 4.3bn guilders. North American revenues were higher than the average, helped by breakthrough releases from new artists such as Jann Arden and Tracy Bonham.

The number of 1 million-plus sellers reached 15 in the half, compared with 12 in the same period last year, although the top five albums only managed 13 million units, compared to 17 million last time.

The film business continues to grow, although it is still in loss as the company pushes into major film-making. Operating losses dropped to 37m guilders from 46m last time.

Mr Levy emphasised further profits would flow from secondary markets, including home video.

PolyGram last week lost its bid for the MGM studio, being sold by Credit Lyonnais. The company said it would continue looking for acquisition targets for its film business, and would seek a US distributor.

Mr Levy also said he was looking to expand the company's production and library holdings.