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French will go to court over TV battle FTSE 100 drop looms as M&S falls out of fashion

By Christopher Williams

THE French media giant
Vivendi has launched a legal
challenge in Italy in a bid
to stop the billionaire
Berlusconi dynasty creating
a pan-European television
empire.
Vivendi owns a 29pc stake
in Mediaset, the Berlusconi-
controlled broadcaster.
However, it is barred by Ital-
ian regulators from voting
on plans to merge it with its

Spanish sister company

Mediaset Espana under the

banner MediaForEurope.

The Berlusconis aim to

add French and German

channels to the combination

to create a television force

capable of standing up to the

onslaught of US tech giants.

Vivendi said it had filed a

request with the Court of

Milan for its voting rights to

be restored. They were sus-

pended after it also took a

stake in Telecom Italia, rais-

ing monopoly concerns.

Vivendi aims to stop the bid

in part because its control-

ling shareholder, the billion-

aire Vincent Bollore, has his

own vision of a pan-Euro-

pean broadcaster. It claims

the MediaForEurope deal

structure hands the Ber-

lusconis too much control.

Vivendi owns the French

pay-TV operator Canal+ and

invested in Mediaset in hope

of building an alliance across

the southern continent.

By Louis Ashworth

WAVES of store closures

mean it is no longer a fixture

of some high streets, so

perhaps it is inevitable that

Marks & Spencer should also

disappear from the FTSE

100. The retailer, a founding
     member of the blue-chip
     index in 1984, faces
     relegation next week.
     M&S is expected to slip
     into the mid-cap FTSE 250
     as part of a quarterly reshuf-

fle a week on Wednesday

unless it can manage a lift in

its share price by the close of

trading the day before.

The retailer, attempting to

reinvent itself as an online

supermarket, is valued at

£3.64bn, after its shares

shed more than a fifth of

their value in recent months.

“Marks and Spencer for so

long has been a candidate

for going down, only to just

escape at the last minute,”

said Helal Miah, a Share

Centre analyst.

“The last time around it

was saved by its well-timed

rights issue, but alas, it can

only hold out for so long.”

The coveted FTSE 100

place may go to Russian gold

and silver miner Polymetal,

which is worth £5.24bn,

having risen nearly 40pc

since the start of May.

M&S is preparing to enter

the competitive online gro-

cery market next year, after

buying a 50pc stake in Oca-

do’s retail arm for £750m.

The deal, by Steve Rowe,

M&S chief and Archie

Norman, the chairman, has

raised concerns that the

retailer is paying too much

to be “very late to the party”.

Daily Mail publisher sells energy arm for £300m in latest retreat

By Christopher Williams

THE owner of The Daily Mail has
cashed in its energy information arm
for £300m in the latest stage of a radi-
cal pruning that has increased its focus
on the tough newspaper market.
DMGT announced yesterday that it
had sold Genscape, which provides
data on oil and gas markets, among
other fields of energy, to Wood Mac-
kenzie, the Edinburgh-based consul-
tancy arm of US giant Verisk Analytics.
The deal comes two years after weak
trading, especially in the US solar en-

ergy market, forced DMGT to knock

£140m off the book value of Genscape

leaving it rated at only £141m.

Paul Zwillenberg, DMGT chief, said

the business had been turned around

by shutting down unsuccessful ven-

tures. DMGT would however “not be

the best long-term owner”, he added.

The sale, which leaves the company

with £200m cash on its books, is just

the latest that reduces its complexity.

DMGT recently offloaded its 49pc

stake in the listed financial publisher

Euromoney and returned cash to share-

holders in a landmark transaction that

increased the dominance of Lord Ro-

thermere, its chairman. His family

founded the company and the 51-year-

old now owns a 36pc financial interest

as well as all the voting rights available

in its unusual share structure.

Lord Rothermere and Mr Zwillen-

berg, his former college room-mate,

have also shut down an unsuccessful

US property information venture and

sold a major stake in the owner of Zoo-

pla, among other disposals.

The step-by-step retreat from pro-

fessional markets has increased

DMGT’s exposure to the challenging

consumer media sector, which is in-

creasingly unpopular with institutional

investors as print declines and mass-

market publishers struggle to make a

living from digital advertising. In the

latest national newspaper circulation

figures, The Daily Mail lost 8pc of its

sales compared with July last year.

Meanwhile doubts persist over the

ability Mail Online, its free website, to

convert its large audience into profits.

Credit Suisse analysts warned last

night that the sale further increases the

company’s reliance on the Mail titles.

They applauded the price achieved,

however, which equates to more than

20 times the cash earnings from the en-

ergy information business.

Despite investor concerns, Lord Ro-

thermere and Mr Zwillenberg have at-

tempted to further expand DMGT’s

consumer publishing interests. The

company has recently been an unsuc-

cessful bidder for the Irish newspaper

group Independent News & Media and

for Dennis Publishing, the company

behind the humour magazine Viz.

Sources said DMGT is now pursuing

the national newspaper The i, which

has been put up for sale as part of JPI

Media, the portfolio of mostly local ti-

tles formerly known as Johnston Press.

The retrenchment of DMGT and its

increasing focus on consumer media

has prompted some analysts to ques-

tion whether it will remain listed.

Germany’s

confidence

slumps on

global risks

By Louis Ashworth and Tom Rees

GERMAN business confidence has
sunk to its lowest level in nearly seven
years according to a closely-watched
measure, as the country’s ailing manu-
facturing sector drags it to the brink of
recession.
Europe’s biggest economy is strug-
gling as its export-reliant manufactur-
ers feel the impact of global trade
headwinds, which sent it into a 0.1pc
contraction during the last quarter.
The latest figures from the Ifo Insti-
tute’s business climate index, released
yesterday, showed confidence slid for
the fifth month in a row during August
to reach its lowest level since Novem-
ber 2012, falling from 95.8 to 94.3.
A handful of German industrial gi-
ants have cut their forecasts as trade
worries escalate. The Ifo’s report said
manufacturing outlook “has yet to hit a
floor”, with expectations hitting their
lowest levels since the financial crisis.
The German government has indi-
cated it is looking into finding ways of
stimulating the economy through in-
vestment, with Olaf Scholz, the finance
minister, floating a €50bn (£45.4bn)
figure for easing.
“The last time that industrial compa-
nies demonstrated such pessimism
was in the crisis year of 2009,” said Cle-
mens Fuest, Ifo president. “Not a single
ray of light was to be seen in any of Ger-
many’s key industries.”
Mr Fuest said service sector condi-
tions had “deteriorated noticeably”,
while a decline in wholesaling hurt
trade. Construction sector sentiment
dipped slightly, but Ifo found compa-
nies were “not expecting a major
change in what are still very favourable
business conditions”.
Fears of a global recession have risen
in recent weeks, as a tit-for-tat tariff

Europe’s biggest economy

on brink of recession, as

analysts warn that outlook

‘has yet to hit a floor’

clash between China and the US spilt

onto markets, sending investors flee-

ing from equities.

UBS, the world’s biggest wealth

manager with £2.03 trillion in invest-

ments under its auspices, has shifted to

a pessimistic position on stocks for the

first time since the eurozone crisis – a

sign that negative sentiment is increas-

ingly taking hold.

“Risks to the global economy and

markets have increased, following a re-

newed escalation in US-China trade

tensions,” Mark Haefele, UBS’s global

chief investment officer, said in a memo

to investors.

Markets are also being roiled by wor-

ries over the risk of a no-deal Brexit,

which have pushed the expectations

for inflation to their highest level in

more than a decade. A measure of infla-

tion expectations for the next five years

has jumped to near 4pc amid rising

fears of a cliff edge Brexit on Oct 31.

The surge in RPI swap rates suggests

that investors are bracing for a period

of high inflation not seen since the rise

in oil prices earlier this decade and the

first half of the Nineties, warned Bank

of America Merrill Lynch.

Economists have warned that infla-

tion would spike in a no-deal Brexit.

Import costs would be pushed up by a

slump in the pound and higher tariffs.

The inflation measure is at “extreme

levels” and is “striking” given the

“chronically depressed” expectations

elsewhere, said Mark Capleton, a Bank

of America Merrill Lynch strategist.

He added political risks, such as

higher government spending, and a

“credibility loss” at the Bank of Eng-

land could also be contributing to this

“unique trend” in the UK.

Expectations for inflation in the eu-

rozone, for example, have hit record

lows amid fears that the European Cen-

tral Bank will struggle to lift already

subdued CPI as growth stutters.

Investors will be paying close atten-

tion to Germany’s consumer price in-

dex inflation figures, due for release on

Thursday. Inflation in the country has

recovered from deflationary lows hit in

2016, but fallen again slightly this year.

Lord Rothermere

has increased his

dominance at

DMGT as the

publisher offloads

noncore ventures

Planting an idea Angela Merkel, Germany’s chancellor, makes a point to Donald Trump during the leaders’ bilateral talks at

the G7 Summit in Biarritz in south-western France. The US president called Mrs Merkel a “brilliant woman”.

REUTERS

By Alex Shipman

SMALL companies are being crippled

by an “air-con tax” which means their

business rates increase if they install

equipment to keep workers cool in the

heatwave.

The Government is this week being

urged to lift the tax after Britain baked

in record bank holiday temperatures of

33.3C (92F).

Businesses are also expected to pay

increased rates if they install CCTV on

their premises – despite incurring total

annual costs of up to £17 bn as a result

of crime, according to the Federation of

Small Businesses (FSB).

The Valuation Office Agency classi-

fies air conditioning, CCTV systems,

fire alarms, lifts and solar panels as

“plant and machinery” assets which

add value to a property.

This forces business rates up mean-

ing owners are “pummelled with a

huge tax bill” for “trying to keep work-

ers cool”, the FSB said. Around 190,000

business premises were summoned to

court over the non-payment of busi-

ness rates during the last financial year.

Mike Cherry, the FSB national chair-

man, said: “It’s ludicrous that doing

something as simple as trying to keep

your employees and customers cool

with an air conditioning unit can cause

your business rates to spiral.

“Sunny weather like this could also

have business owners thinking about

installing solar panels. These too are,

sadly, subject to additional business

rates. When you consider the effect of

business rates alongside the political

uncertainty that small firms have been

up against over the summer, it’s no sur-

prise that seven in 10 are not planning

to increase investment in the near fu-

ture.

“With the economy contracting last

month, this Government should be de-

vising new incentives to invest and re-

thinking elements of the tax system – like

business rates – that encourage the op-

posite.”

Air conditioning tax is far from cool for small companies

‘The last time it was

saved by its rights

issue, but it can only

hold out for so long’

The Daily Telegraph Tuesday 27 August 2019 *** 27
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