Daily Grind Of Still Water

Investment spend on new products and the Internet has accelerated to pounds 31m That compares with pounds 45m for the whole of last year. Lord Hollick, the chief executive, yesterday rejected suggestions that the group was planning to get out of UK newspaper publishing or television. “I’ve got ambitious plans to grow in both areas and we’re rather hopeful that there will be some sort of relaxation in the television area which will help us to continue build that business.”
He said that the group would like to increase its stake in Channel Five, the newest terrestrial channel, which is now close to break-even.The Express, he added, had stabilised its circulation under the former Independent editor Rosie Boycott and was now aiming to raise it over the next year or so.The group was also focusing on spin-off titles and websites exploiting The Express and Star brands.Profits fell by 16 per cent in the first half to pounds 137.6m, reflecting the loss of revenue from businesses that United had exited as part of the strategy announced in February to refocus the group on high-yielding areas in electronic media. UNITED NEWS & Media, owner of The Express and Star newspapers and a raft of ITV franchises is looking to expand its television interests.

Underlying turnover, excluding the US, increased by 3.8 per cent to pounds 168m and net income rose to pounds 29.4m from pounds 24.9m.Trinity said its earnings per share were up 17.9 per cent to 21.2p and set an interim dividend of 4.8p.. But turnover fell slightly to pounds 168m from pounds 174m.A spokesman for the company said this 3.6 per cent reduction was due to the sale of its US operations in 1998. Profits are significantly ahead, borrowings have been substantially reduced and the rejuvenation of the Mirror is a demonstrable success.”Trinity’s pre-tax profits for the six months to 27 June were pounds 42.5m, compared with pounds 36.2m for the same period last year. Mirror chairman Victor Blank said: “The first-half of 1999 has seen a continued improvement in the group. Mirror Group’s Northern Irish publications include the Derry Journal.A spokesman for Trinity said yesterday: “We have received a number of expressions of interest from various parties with regard to the acquisition of our Northern Ireland business.”We are also satisfied that the divestment of this business can be achieved efficiently and on favourable terms.”Mirror Group’s first-half profits from operations to 4 July rose to pounds 40m from pounds 24m for the same period last year and turnover was up 5 per cent at pounds 360m. Both companies said their results had been boosted by gains in readership and advertising revenues.
Last week, the two groups jointly announced that they would merge in a pounds 1.5bn deal that will create the UK’s biggest newspaper publisher by weekly circulation.As a condition of the deal, the Government has said Trinity must sell off its flagship title The Belfast Telegraph and three other Northern Irish titles in the interests of competition. Mirror Group, whose titles include the Mirror, the Sunday Mirror and the Sunday People saw its first-half profits soar 67 per cent while Trinity, the UK’s biggest regional newspaper publisher, reported an 18 per cent rise in its profits for the same period.

TRINITY AND Mirror Group, the UK media companies which agreed a merger last week, announced healthy half-year profits yesterday. In these kind of markets people will have lost money.”Although hedge funds and Western banks lost up to $40bn when the Russians refused to honour their GKO bonds, the real problem that brought LTCM to the brink of collapse was the widening of credit spreads in the the swaps and high-yielding bond markets which blew its strategy of buying high-yielding bonds in anticipation of yields falling to bits.. However, in the last three or four days they have really blown because of concerns about the viability of a financial institution.”Said another trader: “The markets are very strained They are very like they were last year. However, over the last few days talk that a major institution is in difficulty has come to the fore.Some of the big investment banks yesterday admitted privately to sustaining small losses over the past few days but nothing that would result in a material profits hit let alone a default.Adrian Davis, swaps analyst at ABN-Amro, said yesterday: “Over the past few months spreads have been widening out because of concern at oversupply in the bond market. Goldman Sachs was reported to have unwound a big swaption (combined swap and option) position, and was also rumoured to have lost pounds 200m on European options.There was talk, too, that the Fed was holding back on raising short- term interest rates to keep one of the big securities houses afloat.The problems in the swaps market appear to have initially been caused by concern about the pile-up of corporate issues ahead of the fourth-quarter when demand is expected to dry up because of Y2K fears.

Sources close to LTCM have been similarly dismissive of reports that it too was again in difficulty, less than a year after being rescued by a consortium of 13 banks including Barclays, Deutsche and Merrill Lynch.Other accounts have referred to a big US or Swiss bank having taken a big hit.Worries about big trading losses have been exacerbated by a number of large trades in both the equity and swaps market yesterday and on Thursday, indicative of an unwinding of big market positions. Spreads on 10-year swaps have widened on both sides of the Atlantic from the early 80s (0.8 per cent) to 110 over the past few weeks. Over the past few days the widening has accelerated.The UK gilts swaps market is one of the most liquid in the world and a favourite haunt of big hedge fund players.Tiger, the $12bn hedge fund run by New York-based financier Julian Robertson, yesterday dismissed as “rubbish” reports that Goldman Sachs, and Chase had cut its credit lines. The market for swaps, complex interest-rate derivatives which are widely used by hedge funds and the proprietary trading desks of the big investment banks to fund their high-risk trading strategies is, say traders, showing the same signs of distress that was seen after the Russian bond default last August.
This has taken the form of a widening of credit spreads – the interest rate differential – indicative of concerns within the market of a major default.

CONCERN IS growing in the financial markets that a major hedge fund is in difficulty, prompting fears of a repeat of last year’s crisis when the Federal Reserve in the US had to mount a $3.5bn bail-out of Long- Term Capital Management (LTCM) in order to stave off a global financial collapse. However, Mr Wallace said that a capital distribution to shareholders would be one of the options C&W looks at. “It is nice to have to have a strong balance sheet but you can also end up with an inefficient capital structure,” he added.Outlook, page 19. Although Mr Samples would have preferred a flotation of the business, One2One said a single committed owner would end the uncertainty and help the business to grow.Together with the pounds 3.5bn raised from the sale of Cable & Wireless’ residential cable interests to NTL, Cable & Wireless is likely to have net cash at the end of this financial year.This will help it to fund its capital expenditure programme, which this year alone will reach pounds 3bn. A spokesman for the German telecoms giant said that One2One’s large amount of spare capacity during the daytime hours could be exploited to carry more business and data traffic without interfering with voice traffic.The One2One management, led by the managing director Tim Samples, will stay on.