The Investment Column: Border TV

BORDER TELEVISION, the ITV franchise for the England-Scotland border region and the Isle of Man, is making a successful play of building a commercial radio business to complement its traditional television operation. This has seen Border shares undergo a re-rating, which, despite a near 50 per cent rise over the past year, would still appear to have further to run.

The logic is simple. As the UK's fastest growing advertising medium, radio commands higher sales and earnings multiples than television. Border's four radio stations, three under the Century brand, are forecast to record sales of nearly pounds 10m and operating profit of pounds 1.5m for the year to March 2000. Valuing that business in comparison with its peer GWR means Border's radio interests could be worth around pounds 40m.

On the TV side, despite talk of ITV franchises being mature, slow growth businesses, Border saw advertising revenue jump 11 per cent on a 44 per cent share of peaktime viewing. Both figures are well ahead of ITV network averages. Border is continuing to localise content to maximise regional sales, which rose 21 per cent last year. It is also introducing, post devolution, a new southern Scottish edition of the regional news magazine program Lookaround.

With the TV business worth at least pounds 30m, the combined group looks to be heading for a pounds 70m market-cap. That leaves a lot of upside on the current value of just pounds 47m after the stock fell 7.5p yesterday to 435p. Accumulate.