Takeover fears as HTV surges

HTV, the ITV licence holder for Wales and the West, has appointed SBC Warburg as its financial adviser, fuelling fresh speculation the company is concerned about a possible takeover bid.

But HTV's chief executive, Chris Rowlands, denied yesterday that the company was expecting an approach. "We are not spending all our time manning the defensive barricades," he said.

HTV has been a potential takeover target for some months, but the sale last week of a 20 per cent block of shares to Scottish Television sent speculation to a fever pitch.

The block was offered to STV by Flextech, the cable and satellite programme maker, which paid pounds 28m plus the HTV holding for a 20 per cent stake in STV, the Scottish licence holder. The deal will be put to STV shareholders at a extraordinary general meeting tomorrow.

Analysts said STV might then make an approach for HTV. The two companies held talks early this year, which foundered on the question of management appointments. Mr Rowlands was apparently unwilling to work under Gus Macdonald, the STV chairman.

News of the Warburg appointment came as HTV unveiled interim pre-tax profits of pounds 6.1m, up 118 per cent on 1994, at the top end of analysts' expectations. The shares were up 1p to 233p, but analysts said the stock had already fully reflected bid expectations.

The higher profits for the six months to June 1995 were driven by the distribution activities under HTV's new rights division. These include the exploitation of TV, cinema and video rights secured from companies such as Turner Entertainment, the giant media company founded by Ted Turner, which is now being sold to Time Warner.

Mr Rowlands said the exploitation of rights would drive profits growth over the next five years, and could represent 50 per cent of profits by 2000.

HTV would continue to produce television programmes for ITV and other buyers, and is currently making a made-for-TV movie based on the BBC series Poldark.

The company would also seek alliances with other producers - either to produce new programmesor to obtain additional rights.

Louis Sherwood, the chairman of HTV, added that the company would push hard to convince the Independent Television Commission to appoint a second designated news producer in additional to Independent Television News to supply the ITV companies. The ITN service, which includes News at Ten, is "too London-centric," Mr Sherwood said. This view was echoed by Mr Rowlands, who said: "the news is not always appropriate for all regions of the country."

The ITV-ITN contract is now being renegotiated, and the ITC may consider adding news suppliers such as BSkyB to the list of designated providers.

Investment column, page 25