PRESS DIGEST - British business press - July 24

The Times

BA JOBS AND PAY TALKS WITH UNITE BREAK DOWN

British Airways BAY.L and Unite negotiations aiming to break the deadlock over the carrier's proposals to axe thousands of jobs and freeze pay have collapsed. The breaking down of the talks means that both BA and the union must now abide by a two week period during which there will be no external communication. The airline described the 14-day cooling-off period as a time "for both sides to reflect on where they are and explore ways to resolve matters."

A QUARTER OF FIVE'S BUDGET ON THE CUTTING ROOM FLOOR

TV channel Five has reduced its programming budget by 55 million pounds to 165 million pounds in 2009, in a move that is thought to be the biggest cut undertaken by any major broadcaster in the UK. The 25 percent slash is understood to have been prompted by the slide in advertising. Highlighting a fall of 15 percent in TV advertising so far in 2009, executive chairman Dawn Airey said on Thursday that the industry had to consolidate because the market was too crowded to sustain all broadcasters. Adding to the difficulties of the station is Channel Four's continuous objection to a proposed merger with Five, with Andy Duncan, chief executive of the state-owned station, saying that such a move would be like mixing "oil and water."

IN&M SELLS STAKE IN CASHCADE

The parent company of The Independent newspaper has sold its stake in Cashcade, owner of the Foxy Bingo website, to internet gaming group PartyGaming PRTY.L. The sale of the 18 percent holding in Cashcade raised 12.9 million pounds for Independent News and Media. PartyGaming is paying an initial 71.9 million pounds for Cashcade. IN&M, which has debts of 1.2 billion pounds, said the sale proceeds would be retained ahead of a financial restructuring.

Tempus:

Imperial Tobacco (IMT.L) (shares should be tucked away for the long term)

Kingfisher (KGF.L) (buy on weakness)

Colt Telecom (COLT.L) (pass)

The Daily Telegraph

HOPES FOR 3,000 CORUS JOBS FADE AS CONSORTIUM WALKS

The future of 3,000 Corus staff is in doubt after a consortium of four international companies abandoned truce talks with the owner of Teesside's last remaining steel plant on Thursday night. The consortium, which is the Teesside Cast Products' (TCP) biggest client, buying 80 percent of all its production, has decided to press ahead with plans to terminate an allegedly legally binding contract. Corus, the former British Steel now owned by India's Tata Steel, said it has filled the plant's order book to keep it open until September but could not rule out the possibility of closure before the end of 2010.

MISYS PROFITS LIFTED BY TIE-UP WITH US HEALTH IT PROVIDER

Shares in Misys (MSY.L) added 1.75 pence at 178 pence after the IT group announced that its profits had almost doubled in the last year, boosted by the performance of its US subsidiary, healthcare IT provider Allscripts. Pre-tax profits jumped to 94 million pounds, compared to the 49 million pounds in the year before, according to full-year results published on Thursday. Group revenue increased by 41 percent to 692 million pounds, while revenue from the group's TCM division fell two percent like-for-like to 161 million pounds. The figures were in line with market expectations, with analysts forecasting group revenues of 700.6 million pounds.

HOME MAKEOVERS GIVE B&Q A BOOST

DIY giant B&Q posted better than expected second-quarter sales, taking advantage of the growing trend for budget home makeovers. Parent company Kingfisher (KGF.L) said that in the 10 weeks to July 11, B&Q stores that have been open more than 12 months increased sales by 0.7 percent, with the gross margin benefiting from fewer price reductions. Ian Cheshire, group chief executive, said Kingfisher remained upbeat despite the challenging trading conditions, adding that B&Q in the UK continued to benefit from "the growing trend for home and garden DIY, low-cost room makeovers and competitor withdrawal in the big-ticket categories."

Questor:

Capita Group (CPI.L) (buy)

Compass (CPG.L) (buy)

Scottish & Southern Energy (SSE.L) (buy)

The Independent

MORRISONS AND TESCO HIT BACK IN OFT DAIRY INQUIRY

Supermarket chains Morrisons (MRW.L) and Tesco (TSCO.L) are continuing their legal battle with the Office of Fair Trading (OFT) over alleged past-price fixing in the dairy market. On Thursday, they strongly denied any wrongdoing after the OFT said it had additional evidence to support the accusations. The two grocers are the only companies still contesting claims of anti-competitive practices which were made by the OFT in 2002 and 2003. Lucy Neville-Rolfe, the executive director of corporate and legal affairs at Tesco, said: "We have always made clear that what we did not collude with anyone and that remains the position."

YELL INVESTORS CHEERED OVER DEBT

Shares in Yell (YELL.L) jumped nearly a quarter at 28.25 pence on Thursday after the directories business said that negotiations with banks over its debt were "on track". The group, which is still favouring the option of extending loans' maturity, said its first quarter results were ahead of expectations. Revenues for the three months to the end of June increased by 1.5 percent to 475.3 million pounds, while pre-tax profit declined by nearly 50 percent to 36.6 million pounds. Yell, which has a 3.8 billion pound debt pile, indicated that it will need to enter talks with its shareholders over its financial position but did not make any mention of rights issues.

ARQIVA PICKS UP KANGAROO ASSETS

Arqiva is set to move into the UK consumer video market following its acquisition of video-on-demand technology from the collapsed Project Kangaroo venture. The new service is expected to be launched within the next months, with programming from both established and independent broadcasters. ITV (ITV.L), Channel Four and the BBC have joined forces to launch the service, but it fell apart after Ofcom, the media watchdog, blocked the move. Terms of the deal, which is to be finalised in the next few weeks, have not been disclosed.

Investment Column:

Kingfisher (KGF.L) (buy)

Capita Group (CPI.L) (buy)

International Personal Finance (hold for now)