Operating profits, struck ahead of gains on the sale of investments, edged ahead to pounds 436m from a restated figure of pounds 434m. The telecommunications giant said it was launching a new Worldnet service to offer a low-cost connection to the Internet and the worldwide web.Contentinal Cablevision has 4.2 million subscribers as well as holdings in programme companies which include Turner Broadcasting.Chuck Lillis, who heads US West Media, said in a statement: “The Contentinental properties are widely recognised as some of the best-run and best-clustered cable systems in the world”. It would serve nearly one of every three US households connected to cable as well as an additional 13.9 million homes internationally.US West is alrady a player in the UK cable and telephony markets, via Telewest, its London-listed joint venture with major US cable company TCI.Separately yesterday, AT&T unveiled ambitious plans to get into the Internet market. It should transform US West, which already has an important stake in the cable interests of Time Warner, into a formidable power in the cable sector.

That could be offset by a drop in the levy paid to ITV by Channel 4.Investment Column, page 18. DAVID USBORNE

New York
In a significant reshuffle of the cable television industry, US West, the regional telephone company, announced plans yesterday to purchase Continental Cablevision, America’s third cable operator, in a $10.8bn deal.The transaction comes in the wake of the telecommunications deregulation bill recently passed by the US Congress allowing telephone and television cable companies to enter into each other’s territories. Several ITV companies tabled very high financial bids to win their franchises in the last licencing round in 1992, and these could be renegotiated starting later this year.Analysts expect that HTV could see its net payments to Treasury decline substantially from 1997 on. Gillette has since returned to HTV, while Boot’s has plans to do so soon.Mr Rowlands said he was optimistic that the company’s licence payment to the Treasury, which totaled pounds 23.3m last year, would be reduced following discussions with the Independent Television Commission. The newly named Harvest Entertainment division, which takes in film, TV production and programme rights, posted revenues of pounds 30.8m.

Harvest’s contribution to profits increased from 30 per cent to about 37 per cent year on year.Louis Sherwood, the chairman, said the growing importance of production and rights acquisition has helped transformed HTV into a “medium-sized media company, not just an ITV licence franchisee like some of the others.”Through its Patridge Films and First Independent brands, HTV is a major supplier of wildlife and childrens programming to a range of UK and overseas broadcasters.The company continued to push costs down in 1995, partly by squeezing margins at independent suppliers as part of what Mr Sherwood described as “getting value for money.”Advertising revenues were slightly down year on year, partly because two major advertisers, Boot’s and Gillette, dropped HTV from their list of broadcast outlets. It has promised to reduce the annual cost to ITV for its news services to about pounds 30m, from the current pounds 55m paid to ITN.Meanwhile, HTV’s pre-tax profits climbed 66 per cent to pounds 12.1m, on revenues ahead 11 per cent to pounds 135m, in line with expectations. The company revealed it spent pounds 300,000 on its unsuccessful bid for the Channel 5 licence, as part of the Virgin consortium.HTV is considered a potential bid target for Carlton Communications, Michael Green’s media company, which last week abandoned a possible bid for MAI, Lord Hollick’s media and financial services group.The core broadcasting business, which includes the ITV licences for the West and Wales, had turnover of pounds 104m. Reuters currently has a “non-compete” clause with ITN but its lawyers are believed to have argued it is not enforceable.BSkyB is expected to lodge its application in coming weeks. The group is expected to underbid ITN for the contract to supply news to ITV.

“The price war is becoming a promotion and marketing war,” he said.Advertising at the start of the year showed a mixed picture with classified and financial recovering strongly but display well down year on year.. MATHEW HORSMAN

Media Editor
HTV, one of the media sector’s hottest takeover candidates, is backing a bid by Rupert Murdoch’s BSkyB to supply news to ITV in competition with Independent Television News.The news emerged as the company revealed sharply higher profits for 1995 and predicted further gains in 1996.Chris Rowlands, HTV chief executive, said: “We have an agreement in principle to support Sky’s application to be a nominated news provider”.The other partners in the joint venture are ITV companies Yorkshire-Tyne Tees, Meridian and Anglia, as well as the financial information company Reuters, a shareholder in ITN. At the same time, the cover price war launch in 1993 by Rupert Murdoch’s News International is all but over, he said.He expected that newspapers would siphon some of the increased revenues from higher cover prices into bigger promotional budgets. From a low point of just pounds 500,000 in the third quarter, pre-tax profits hit more than pounds 9m in the final three months of the year, up from pounds 2.4m in the comparable period in 1994.Mr Grabiner said he expected the newsprint price increases of the past 18 months had reached their height, and that further rises were unlikely. Pre-tax profits declined to pounds 35.5m from pounds 45m a year earlier, on turnover marginally ahead at pounds 255m, as shares declined 16p to 463p. The drop would have been even greater but for a pounds 7.5m exceptional gain on the sale of a stake in Carlton Communications during the year.
But Stephen Grabiner, managing director, said the company “had turned the corner” and that the current year would see a marked improvement.Conrad Black, the company’s Canadian chairman, added: “1995 was a year of unrelenting challenge for the Telegraph but, at the end of it, the company emerged fitter and stronger.”Analysts supported the company’s upbeat message on current trading, pointing to the improving profit trend quarter to quarter in 1995.