PolyGram builds profit

MATHEW HORSMAN

Music and film producer PolyGram yesterday unveiled robust first-half results, confirming a vast improvement in the cutthroat US music recording business. Operating profit rose 21 per cent to 409m guilders, on sales up 11 per cent to 4bn guilders. Earnings per share rose by 15 per cent to 1.50 guilders, from 1.30 a year earlier.

The company, 75 per cent owned by Dutch electronics giant Philips, has climbed to second position in the all-important US music market for the first time, trailing Warner.

However, the film business, a relatively recent addition, posted a loss of 46m guilders, following development costs. In the first half, the company distributed three successful films, including the British-made Shallow Grave.

Analysts in London said a stronger schedule of releases in the second half of 1995 should improve the film side.

The company is also expanding its multimedia operations, including moves with Philips to develop interactive compact disc titles. It intends to intensify efforts to marry its film and music businesses, using PolyGram artists to provide film soundtracks, for example.

The company has also signed several joint ventures to develop cable channels, including its alliance with music video network MTV to launch two channels in Asia.

The core music business was especially strong in the pop segment of the market, with new releases from the Cranberries, Elton John and Bon Jovi. Twelve pop albums managed sales beyond a million copies each, compared to five titles in the first half of 1994.

Classical music did less well, reflecting its status as a mature and slightly declining market.

Alain Levy, PolyGram's chief executive, told analysts by satellite from the US that the second half was likely to mark "further progress" in developing the film side of the business, with 12 feature films scheduled for release in the English-language market.