View from City Road: LWT makes a weak case for loyalty

LWT's institutional shareholders are doubtless already busying themselves with the mechanics of delivering their verdict on Granada's bid by 3pm on Friday.

Most will probably already have made up their minds. If the City is to be believed, their verdict will be in Granada's favour; LWT shares are now trading well under the offer price. The logic behind acceptance is easy enough. Granada's offer is not as generous as the sky- high earnings multiples offered for Central Television or Anglia, but it is more than anyone else is willing to put on the table. In the absence of another buyer, LWT's current share price cannot be justified or sustained.

Television shares are out of kilter with their underlying asset values and earnings prospects. Shareholders should be selling out of the sector altogether, or opting for a group like Granada whose size and versatility of management at least offer the possibility that limited- life ITV franchises will be used as a springboard into other, more exciting areas.

For that reason LWT's institutional shareholders would be justified in rejecting the accusation that they are guilty of short-termism or have dishonourably failed to stand behind a management that had served them well.

Under LWT's existing management the share price has performed well. But it is arguable that they have not been much tested, apart from a successful franchise bid that mixed luck and judgement.

There are many who would say the future for terrestrial television lies in the development of programming assets. Yet of all the ITV companies only little HTV, which last week linked up with the cable operator Flextech, has shown much vision. Certainly LWT has failed to demonstrate that it has such an imaginative approach to its future.

On the other hand, Gerry Robinson has an admirable track record won, at least in part, in adversity. The jury is out on whether his master plan for Granada will succeed, but Mr Robinson has made an excellent start and is at least as deserving of shareholder support as Sir Christopher Bland.