Yesterday’s announcement by the ITC of the Channel 3 franchise winners resulted in frenetic activity on the Stock Exchange, with share prices reacting quickly to the fates of the TV companies.
LWT, one of the big success stories of the franchise round , saw its shares rise 53p to 198p. Granada, who also did well yesterday, recorded an 11p rise in its share price to 184p. Both LWT and Granada put in fairly low bids (£7.58m and £9m respectively), gambling that their opponents would not pass the quality threshold.
Central and STV, who were both assured of retaining their franchises as the sole bidders in their area, saw their share prices rise by 43p and 15p respectively.
Losers TVS and TV-am recorded falls of 7p and 22p after news of their failure, whilst Thames actually saw a modest rise, closing 7p up at 203p (having peaked during the day at 220p).
Although Anglia and Yorkshire both retained their franchises, concern over the size of their bids sparked falls in share prices (down 33p to 198p and down 22p to 180p respectively).
Sunrise was slammed by ousted TV-am for the excessive size of its bid ; TV-am chairman Bruce Gyngell predicted that Sunrise would be bankrupt by 1994, asserting that Sunrise’s bid (two and a half times that of TV-am) was £8m more than TV-am’s profit last year. Sunrise may have to pay more than half its revenue to the Treasury in 1993.
City analysts predict lean times ahead for Sunrise,Carlton, Meridian,Yorkshire and Tyne Tees, who have all committed to pay in excess of a quarter of their annual revenue to the government.
Carlton could be paying 29% of its ad revenue to the government in 1993, whilst Yorkshire may prove to be the biggest loser. Under existing rules it would expect to pay £16.8m in 1993; under the new system, Yorkshire will be paying out £48.6m (35% of ad revenue) to the government.
Meanwhile , the Stock Exchange is currently investigating suspicious movements in the share prices of LWT, which jumped 22p to 146p on Monday. LWT’s bid was much lower than expected, and there has been speculation that the size of the bid was leaked.
The four new companies now have six weeks to show the ITC that they have access to enough funds. Carlton should have no problem with the finance, but Sunrise, Westcountry and Meridian now have to actually raise the funds promised by shareholders.
