View from City Road: Pearson coming up to the crossroads

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Half-time in the transformation of Pearson into a miniature News Corporation finds the budding multimedia group rather pleased with its performance, and not without some justification.

Costs continue to be cut with admirable vengeance. The demerger of Royal Doulton and the Camco sale have gone well, and left the group's core businesses looking coherent. They are putting in a creditable performance, and advertising revenues are looking up, albeit patchily.

Thames TV, the second-biggest supplier of programmes to ITV after Granada/LWT, looks to have been an astute buy. And BSkyB is beginning to offer the prospect of hitherto undreamt-of riches.

Against that must be weighed the embarrassment of having seen Rupert Murdoch snatch Star TV, the Asian satellite service, from under the group's nose. Yet that increasingly looks to have been a blessing in disguise. Star's fate is clearly to be determined by the approval (or otherwise) of a number of autocratic and dictatorial regimes - and by its ability to maximise revenues. Mr Murdoch's nimble feet may negotiate this minefield; whether Pearson could have done is doubtful.

Pearson has strong brands and, post-demergers, a more rational business mix. But many of its investments are opportunistic rather than synergistic. Sooner or later it will have to cash in passive holdings like BSkyB and either abandon or expand business areas where it is a relatively minor player, like regional newspapers.

There must be a limit to the waiting game, however, and when it comes, it will probably prove to be the resolution of the current review of cross-media ownership. A favourable solution would give Pearson the opportunity of growing non-print businesses to rival books and financial newspapers.

Change is at least 18 months away, though, so investors are in for a quiet period.