View from City Road: Carlton cashes in on video kids

PARENTS know the relief of plonking fractious youngsters in front of the telly to watch a video. The company that profits from these sedatives is Carlton Communications, which yesterday reported a solid 15 per cent increase in pre-tax profits.

In the past two months Carlton's US video duplicating arm has churned out 17 million copies of Walt Disney's Beauty and the Beast. In Britain Peter Rabbit, which it has also published, looks destined for tens of thousands of Christmas stockings.

People are increasingly buying pre-recorded videos for keeps - the so-called sell-through market, as distinct from rental. In the US, sell-through - mainly children's and special interest tapes - has grown by a compound 42 per cent over the past five years. Carlton now expects similar growth elsewhere. It has 35 per cent of the video and audio duplicating and distribution market, and has signed long-term contracts with many of the biggest studios, including Warner, Home Box Office, CIC and the all-important Disney.

The division produced a pounds 15.5m increase in profits to pounds 46.6m - almost half Carlton's total earnings. Sell-through is one reason to get excited about Carlton. Its video and sound products division, which makes the clever gizmos that produce television and movie special effects, is another, producing a rise in profits from pounds 14m to pounds 19.4m.

But there are risks. The television and film services division, which processes film for the studios and offers post-production services to television makers, has little immediate growth potential, although Carlton blames exchange rate movements for some of the decline. An untimely acquisition could also knock sentiment.

The biggest uncertainty is Carlton's clutch of British television assets, notably Carlton TV, which takes over the Thames franchise on 1 January, and its 20 per cent in GMTV, which begins broadcasting on 1 January, 20 per cent of Central and its recently acquired stake in ITN. Much depends on the advertising market and Channel 3's share of the advertising cake as competition increases from BSkyB, Channel 4 and, soon, Channel 5.

Forecast profits of pounds 128m this year translate into earnings per share of 42.3p, placing the company on a multiple of about 17 times after yesterday's 2p share price fall to 717p.

Pricey, but not unattractive, considering the likely upturn in the US economy, where Carlton earns 55 per cent of its profits.

(Photograph omitted)

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones