SBHD: The BSkyB flotation needs some objective research following the end of the City’s blackout. The Saatchi crisis, meanwhile, has created a beneficiary
Anticipate some upbeat intelligence on newly floated BSkyB this week. The City research blackout that accompanied the flotation expires today (Wednesday) and word has it that the manner in which Rupert Murdoch’s satellite interests were talked down by the more traditional media in the immediate aftermarket will be balanced by some rather more considered opinion.
The market, at least, appears to suggest that this is the case. BSkyB’s shares, floated at 256p and having been as low as 245p, bounced to close last week at 251p, 8p off their high, capitalising the conglomerate at £4.3bn and providing a demanding prospective earnings multiple of 47.3.
Investor relations for the issue has been a trial – News International’s newspapers have been reluctant to write about it for fear of favour, while “independent” papers have been reluctant for the opposite reason. Some truly objective research from the City should clear the air.
Meanwhile, the Saatchi & Saatchi factor has not, as predicted in some quarters, sent agency stocks south as the City supposedly takes fright at the now somewhat jaded revelation that advertising’s value is attached to creatives who can walk out at a moment’s notice.
True, Gold Greenlees Trott lost five per cent over Saatchi’s week from hell to close at 154p, but Abbott Mead Vickers.BBDO held firm, as did WPP. The truth is that the old adage of an ad agency’s assets going up and down in the lifts has already largely been discounted by the market.
As for Saatchi itself – as distinct from himself – the price of shares fell a shade over 27 per cent during the week of executive departures to close at 102p, rather better than its midweek trough, when they offered change from a pound, but a good 30p down on the period before the Maurice dbÃÂ¢cle broke.
Chief executive Charles Scott gamely says the worst case scenario is only that five per cent of group revenues will depart with pro-Maurice staff. But the fact remains that Chicago fund manager David Herro may not be losing too much sleep over a collapsed Saatchi share price. The gamble had always got to be on a break-up prospect – and at this price Saatchi’s total may not be worth the sum of its parts. On this basis, there has got to be some speculative action in the Saatchi price soon.
One City beneficiary of the Saatchi crisis has been Sir Tim Bell’s Chime Communications, which has spun the pro-Maurice lobby to the media. It gained some 5p over the week to close at 33p. Which only goes to show: If you want to get ahead, get a hack.
George Pitcher is joint managing director of media consultancy Luther Pendragon.