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Michael Grade’s defection from the BBC to ITV is obviously the biggest story around today. Our biggest difficulty will be squeezing it all in.
On the corporate side, we’re doing more online and in the paper about what investors, advertisers and the industry think. ITV shares are now down 1 per cent but this is because Grade’s appointment kills off any hope of a bid, not because people aren’t delighted. Spreads on ITV credit default swaps have narrowed too, as investors in ITV debt bet against a takeover. Also depressing the shares, no doubt, is the suspension of the group’s £500m share buy-back programme half way through. This should free up funds to reinvest in programming.
For the ITV board, Grade’s appointment is good news: apart from chairman Sir Peter Burt, it includes some directors at the beginning of their non-executive careers, including Mike Clasper, the former boss of BAA, and Sir James Crosby, ex-chief executive of HBOS. They needed to impress and they have done. There remains a corporate governance question: is it right to put so much power in the hands of one man? With ITV in such a mess, very few people today will object; but they may feel different in 18 months if Grade doesn’t deliver all that they hope.
Even more significant than all this is what the move means for the BBC. Executives there are beside themselves with rage (the Today programme treated the story almost as if the Queen had died) and, as many have pointed out already today, the BBC is in the final stages of its extremely delicate licence fee negotiations. The head of the BBC is an extremely political appointment and he or she will now be chosen just before a change of prime minister and, shortly after that, a general election. Have your say in our online discussion.
We are blessed with two other big stories today. EMI has confirmed this morning that it has been been approached about a possible bid (could be worth £2.5bn or more). As we wrote this morning, KKR and Goldman Sachs know EMI well, but we think the potential bidder referred to this morning is may be someone else. EMI shares are up more than 10 per cent on the news.
Also, Iberdrola has delivered its £11.6bn offer for Scottish Power, which is recommending the bid. Scottish Power investors will receive 777p a share, 53 per cent of it in cash. The price is weaker than most of us expected. Scottish Power investors looked decidedly unimpressed: the stock is off 1 per cent at 739p. Also, surely there are double standards at work here: a Spanish company is free (quite rightly) to buy a British utility, but when a German one tries something similar in Spain everyone goes loco.
Yet more ghastly news from GCap. It said that in the first half, total group listening hours being sold were down 5.5 per cent like-for-like on last year. It also said the current advertising market remained “very difficult and visibility”. GCap shares are off more than 4 per cent.
Barclays said rising personal insolvencies in the UK had continued to push up bad debt charges at Barclaycard. It also said it expected pre-tax profits for 2006 to be in line with analysts’ forecasts of £6.99bn, as strong growth in Barclays Capital, its investment bank offset weaker parts of the bank. Last year Barclays reported pre-tax profits of £5.28bn.
Rumour of the Day: Neil Hume on our markets desk is hearing that Tata Steel might come back for Corus with a knock-out bid at 525p and snap up stock in the market at the same time to keep CSN out.