Yorkshire warning puts spotlight on chairman

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The Independent Online
CLIVE LEACH, chairman of Yorkshire-Tyne Tees, is believed to be under pressure to resign following revelations that the television company will sink into the red this year.

There is speculation that his departure will be the price demanded by the major shareholder, London Weekend Television, for the way in which Yorkshire's advertising sales methods have rebounded on this year's profits.

Despite LWT's rumoured unhappiness with Mr Leach, who is also chief executive, he is thought to have the backing of Yorkshire's directors.

Geoff Brownlee, Yorkshire's director of corporate affairs, insisted yesterday that as far as the board was concerned 'Mr Leach's position has never even come under discussion'.

Yorkshire warned yesterday that advertising revenues would be lower than expected and that, together with redundancy costs associated with the closure of its Media and Airtime Sales subsidiary, it was likely to make losses in the year to 30 September.

It gave no details but analysts estimated that revenues could prove to be pounds 10m or more below their original expectations. Precise figures will not be disclosed until December, when the company reports its annual results.

Yorkshire's problems seem to have been triggered by its decision to switch responsibility for selling its airtime from MAS to Laser. Laser, a subsidiary of LWT, which has a stake of slightly less than 15 per cent in Yorkshire, took over sales from 1 October and is understood to have insisted on a 'clean break'.

This will depress this year's trading because MAS, like many television advertising groups, was accustomed to boosting profits in slack periods by forward selling of discounted advertising slots.

The practice is thought to have been used to an increasing degree by television companies as a result of the difficult environment created by the recession and costs of the new franchise system.

As a result Yorkshire's warning has led to speculation that other ITV companies could be in a similar position. One senior television executive said: 'What you see is what happens when pressures like this arise. This is exactly what was expected to happen. It is just that it is happening sooner rather than later'.

But bringing forward advertising revenue from airtime sales yet to be broadcast meant some companies were living a Mr Micawber-style existence, another industry source said.

The companies were in effect hoping that the recession would end and rising revenue would bail them out. But this had not happened fast enough.