Rumours of deal on Express spark media share surge

Dramatic signals: Frenzy of speculation about newspaper and television consolidation grips markets, while long-awaited cable shake-up begins
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The Independent Online

Media Editor

Frenzied speculation over a radical consolidation of the newspaper and television sectors sent media shares soaring yesterday amid growing conviction that United News and Media was set to sell its Express newspaper titles.

Lord Stevens, United's chief executive, issued a terse "no comment" to speculation that he had found a buyer for the Daily Express, the Sunday Express and the Daily Star.

Leading the list of potential bidders was Michael Green's Carlton Communications, which has routinely refused to rule out an investment in the national newspaper industry. Some analysts said last night a bid for the whole of United would make sense, giving Carlton control of the group's regional newspapers, magazines and exhibitions business.

Under proposed ownership rule changes, Carlton would be able to own a national newspaper in addition to its two ITV franchises.

Two other potential bidders for the Express titles are Tony O'Reilly, whose Independent Newspapers owns 43 per cent of the Independent, and Andrew Neil, the former editor of the Sunday Times who last year revealed that he was prepared to spend as much as pounds 300m to buy the two titles.

United's share price climbed 29p to 624p in heavy trading yesterday. "This is more than just buying on fundamentals," said Jonathan Helliwell, analyst at James Capel. "The market clearly thinks there is something going on."

Other analysts played down suggestions that Lord Stevens was prepared to sell. "He has just recruited new people to the titles and promised to spend more money to turn them around. I can't see why he would sell now," one leading analyst said.

Media analysts predict further consolidation of the newspaper industry, following the closure last year of Today. Fewer newspapers, along with moderating newsprint prices, should improve the cost base of the industry, according to Steven Winram, analyst at BZW. "Add to that the fact that consumer spending is likely to pick up and we become quite bullish on the prospects for most newspapers," he said.

Mirror Group, which also holds 43 per cent of the Independent, saw its shares climb to 201p from 194.5p yesterday, but analysts said the share- price move reflected improving earnings prospects for the publisher of the Daily Mirror, the People and the Scottish Daily Record. "The cover price of the Daily Mirror has just gone up on Saturday, and the company could be considering an additional rise in the week," Mr Helliwell said.

Meanwhile, ITV stocks continued their record run, with bid candidates Yorkshire-Tyne Tees, HTV and Border all rising sharply in trading yesterday. YTT, in which Carlton and Granada, the media and leisure company, both have a 15 per cent stake, has seen its shares rise nearly 38 per cent since 15 November, when the Government confirmed its intention to liberalise cross-media ownership rules.

"The big question in the consolidation of the ITV companies is when, by whom and at what price," Mr Helliwell said.

The Broadcasting Bill, which is now being debated, is scheduled to be passed by the summer. Analysts do not rule out a large bid in the media sector before then, provided predators are willing to park their shares until the Bill becomes law. "It is a risk," said one analyst. "But the odds are that the Bill will be passed."

Comment, page 21

How the companies stand

Company Nov. 15* Latest % change

Mirror Group 164p 201p 22.6

United News 532p 624p 17.3

Pearson 625p 685p 9.6

Border 220p 282p 28.1

YTT 615p 847p 37.7

HTV 271p 349p 29.8

* Proposed rules on cross-media ownership published in Queen's Speech