Sharewatch W/E 25/10/96

Three areas of media activity last week created turbulent prices in the stock market: rumours that BSkyB is interested in taking over Pearson; a merger between Cable & Wireless, Nynex and Bell Cablemedia; and STV selling its HTV stake to United News and Media.

On Monday Pearson finished 33.5p higher at 730p due to the takeover talk, though BSkyB vehemently denied any such intentions. BSkyB advanced more slowly, increasing 5.5p to 696.5p. Continuing rumours on Tuesday pushed Pearson to a new high of 742.5p.

On Tuesday the news broke that a big merger would take place among key UK cable players *Cable Companies Merge. On the back of this Nynex CableComms rose 23.5 to 119.5p and General Cable and TeleWest, though not involved in the merger, also increased because they were seen as possible bid targets. General Cable put on 19 to 197p and TeleWest closed 12p ahead at 135p. BSkyB, which would almost certainly suffer from this alliance, dropped 18p to 678.5p.

BSkyB dropped further on Wednesday when it emerged that Rupert Murdoch had been involved in a huge cash raising exercise which effectively meant he was ‘mortgaging’ his BSkyB shares. The price fell 42.5p to 636p. The satellite broadcaster suffered a further blow on Thursday when Oftel said it would be investigating BSkyB’s promotional offer with BT whereby members of BT’s Friends and Family scheme were offered savings on Sky subscriptions.

Friday’s news that STV had sold its HTV stake to United News & Media *STV Sells Stakes In HTV And ITN meant that UNM softened 0.5p to 668.5p, though it also provoked thoughts of further acquisitions in the TV sector. YTT rose 20 to 1220p while Emap, currently experiencing boardroom difficulties, fell 16.5 to 696p.

* MediaTel subscribers only