LWT widens influence: Stake in Yorkshire Tyne-Tees aims to boost advertising revenue
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Your support makes all the difference.LONDON Weekend Television, whose former senior executives now run both the BBC and Independent Television networks, yesterday increased its influence over television by buying a 14 per cent stake in Yorkshire Tyne-Tees, the ITV group created by the merger of Yorkshire and Tyne-Tees last year.
The deal comes at a precarious time for YTTV. The Independent Television Commission will rule tomorrow on whether the group has gone too far in its integration of Tyne-Tees.
Critics in the North-east - including Labour MPs Tony Blair and Peter Mandelson as well as Sir John Hall, chairman of Newcastle United football club - have argued that YTTV's integration plans would destroy Tyne-Tees' identity. The ITC is likely to tell the company to reverse some of its cost- cutting measures.
The YTTV stake, which cost LWT just over pounds 14m, was sold by the retailer WH Smith, which has been a significent shareholder in Yorkshire TV since its flotation in the mid-1980s. The retail group has been known to be a willing seller for some time.
WH Smith had protracted talks with Granada TV, YTTV's neighbour in the North-west with which it has not always had the best of relationships. Its interest leaked out in March, pushing YTTV's price up more than a third and convincing Granada the stake was too expensive.
LWT is paying 200p a share - 25p more than YTTV's closing price and nearly double the low of 110p hit last December.
Sir Christopher Bland, LWT's chairman, admitted that LWT had paid a full price but said that it could be justified by another agreement signed by the companies in which LWT would sell the advertising air time of YTTV. He is convinced that LWT's sales force can add a percentage point to Yorkshire's share of network advertising revenue, which fell to 11.1 per cent in the six months to 31 March.
The disappointing performance, along with the increased penetration of Channel 4 in the television advertising market, was responsible for YTTV making only pounds 3.79m pre-tax profits compared with pounds 9.63m in the equivalent period last year. Earnings per share tumbled from 16.8p to 4.7p. The interim dividend was unchanged at 3.3p.
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