Business Week - Will Granada be streets ahead?
As Granada prepares to annouce its interims, what impact will its hospitality demerger and the departure of Richard and Judy have on the media giant?
Investors will discover if it was wise for Granada to demerge its food and hospitality business next Wednesday, as the media giant unveils its first interim results since the break-up.
Granada finalised the spin-off of its hospitality business in February.
It consisted of hospitality group Compass, which it merged with last July, and existing business interests in the same area.
Recent interim results revealed Compass is doing well enough flying solo, as the company reported an increased turnover of £4.079bn and a profit of £268m.
At its first annual general meeting since the demerger, chairman Charles Allen said Granada had performed well as an independent media company.
He added: ‘We are confident of achieving our cost savings target of #30m per annum in 2002.’
The company floated 20% of its shares in subsidiary Granada Media on 18 July and stated its intention to lead the consolidation of ITV in which it now holds a majority stake.
Doubts over this were subdued as the government proposed more flexible rules in broadcasting, a move welcomed by Granada.
In July the Competition Commission also gave the company’s subsidiary Granada Media clearance to acquire United News & Media and the acquisition, worth £1.75bn, was made August 2000.
The terms of this acquisition required that Granada sell HTV and a 20% stake in its Meridian subsidiary to Carlton, which took place in October.
The move has sent shares in both companies higher as City analysts believed the deal has strengthened both companies’ positions.
Resources & Whitepapers
Accounting Software The power of customisation in accounting systems
Overseeing the financial side of things was chartered accountant Henry Staunton. The finance director joined Granada Group in 1993 after serving as senior audit partner in Price Waterhouse. Staunton is non-executive director of EMAP, Ashtead Group and a director of ONdigital.
But not all news was good for the makers of Coronation Street. Falling visitor numbers forced the closure of its studio tours, while ONdigital found itself in hot water as customers said they were not planning to renew subscriptions.
Hope returned when, in April, the company received a #42m contract – shared with the BBC – from the DfEE to produce digital teaching and learning materials in six GCSE subjects.
The company aims to beat the BBC during peaktime hours, become the biggest digital channel, increase internet hits, attract younger more upmarket viewers and increase its daytime viewing – a task which may prove difficult with Richard and Judy defecting to Channel 4.
Granada TV’s site is at www.granada.co.uk
SNAPSHOT
Preliminary results to 30 September 2000
Group turnover: £1,087m
Operating costs: £808m
Operating profit: £253m
Executive directors: Charles Allen, chairman, joined Granada in 1991; Stephen Morrison, chief executive, joined Granada Television in 1974; Henry Staunton, finance director, joined Granada in 1993
Auditor: KPMG
Company profile: Media company Granada produces programmes for commercial television to UK networks such as ITV and 120 other international broadcasters.
On February 1 the company, which operates both on traditional and digital channels, demerged its hospitality business Compass. Granada floated on the London Stock Exchange in 1935.