Insiders reckon that on current numbers an offer of over 1,320p a share for YTT would be dilutive for Granada's shareholders. But a 40 per cent rise in YTT's pre-tax profit to pounds 30.2m in the year to December underlines the value of its franchise. Sales rose by pounds 9m to pounds 271m while fully diluted earnings per share advanced to 34.5p (25.8p).
The figures were struck despite YTT's share of national advertising revenue falling slightly from 10.7 to 10.3 per cent, partly because telecoms companies concentrated their expenditure in the south. YTT more than made up the shortfall by controlling costs and selling more programmes.
But the real kicker for shareholders is the prospect of early renegotiation of the levy YTT pays to the Treasury for its 10-year licence. It shells out a massive pounds 66m a year, index-linked, for the privilege of broadcasting to Leeds and Newcastle. Levy relief could amount to more than pounds 30m a year and begin as early as 1999. YTT is urging a return to a special duty on advertising, which would be applied to all broadcasters, including pay television operator BSkyB and the Channel Four commercial station, both currently outside the archaic licence fee system.
With that windfall in sight and a Granada bid in prospect the shares are difficult to value on fundamentals, but they are well worth hanging on to.