PRESS DIGEST - British Sunday business press - May 3

The Sunday Times

CHANNEL 4 HIT BY FALLING AD SALES

Channel 4 is set to warn that another fall in advertising revenue could result in further cuts to its programming budget. The broadcaster's advertising income fell to 800 million pounds from 825 million pounds in 2008, decreasing the amount it had to spend on popular shows. Chief Executive Andy Duncan will draw attention to the group's increased share of viewers and advertisers, while stepping up his campaign to merge parts of the channel with the BBC's commercial division. Enders Analysis predicts that the group's advertising income could fall by 12 percent over the year, reducing income by 100 million pounds

RAIL DEAL SPARKS 400 MILLION POUND CASH CALL

National Express (NEX.L) has struck a deal with the government to abandon its east-coast train franchise, which should prepare it for a 400 million pound rights issue and a boardroom reshuffle. Government transport officials plan to replace the east-coast deal with a management contract that would see it operate the line for a fixed fee. Rail industry sources said a meeting on Thursday between National Express chief executive Ray O'Toole and Mike Mitchell, rail official at the Department for Transport, resulted in an outline agreement for the franchise to be suspended and replaced with a contract.

COST CUTTING SAGE TO AXE 1,000 JOBS

Software group Sage (SGE.L) is set to announce 1,000 job losses when it posts interim results this week. The group is expected to reveal it will slash 600 jobs globally this year, in addition to the 400 it axed lat year. Around 200 of the job cuts will be in the UK. Analysts claim the move will save the group around 50 million pounds a year. The company is expected to say that all the cuts will be achieved through voluntary redundancies and by not replacing staff who leave rather than compulsory measures. The group is also expected to lower the amount it spends on acquisitions this year in an effort to cut costs.

SHAREWATCH:

Rentokil Initial (RTO.L) (might not be a bad time to jump on board)

The Sunday Telegraph

INVESTORS ASK BALL TO TAKE ITV ROLE

Tony Ball, the former chief executive of BSkyB (BSY.L), has been approached by shareholders in ITV (ITV.L) about taking over the top role at the commercial broadcaster. Ball has been in talks with Legal & General Investment Management (LGEN.L), which owns around 5 percent of ITV, and other leading shareholders about his candidacy for several weeks. The talks are understood to have prompted ITV's board to accelerate its announcement about moving executive chairman Michael Grade to a part-time role. The revelation that Ball is potentially interested in the role will spark speculation in the City that the company can still be revived.

RBS FINANCE CHIEF HEADS FOR THE EXIT

Royal Bank of Scotland (RBS.L) is to press ahead with its boardroom shake-up by announcing this week that group finance director Guy Whittaker is to leave the group. RBS is expected to declare Whittaker's departure in a stock exchange announcement on Tuesday. The banking group does not have a replacement lined up for Whittaker, who is expected to be eligible for a payoff that is likely to be calculated when his departure date is finalised. Sources close to RBS said chief executive Stephen Hester has decided to bring in his own finance director as part of restructuring moves.

WIGGLE FOUNDER RIDES OFF

A founder of UK bicycle retailer Wiggle has sold out of the business in a deal that has landed him with more than five million pounds. Mitch Dall, who founded the company with Harvey Jones, has sold his 26 percent stake in Wiggle to ISIS Equity Partners and the company's existing management team. The sale brings to an end a three-year partnership deal between the private equity group and Dall after it led a 12.3 million pound refinancing of the retailer in 2006 in exchange for a 42 percent share of the business.

QUESTOR:

BG Group (BG.L) (buy)

Vedanta (VED.L) (hold)

Petrofac (PFC.L) (buy)

The Independent on Sunday

HARRODS MOVES EVEN FURTHER UP IN THE WORLD

Egyptian tycoon Mohammed al-Fayed is to take his Harrods brand further upmarket when the department store joins The Luxury Network later this month. For a fee of 50,000 pounds a year, premium brands become part of an esoteric circle which swaps marketing ideas and contacts. Kevin Rose, founding partner of the Luxury Network, which has 57 members in the UK, said the exclusive group "gives directors an opportunity to put together alliances behind closed doors, before they launch (marketing campaigns) to the public".

ARMY TO CONTRACT PRIVATE COMPANY TO RECRUIT SOLDIERS

The Army is set to outsource its recruitment of soldiers and officers to the private sector and will be sounding out potential bidders for the contract later this month. Recruitment sources believe the contract could be worth around 100 million pounds over ten years and will not be finalised until 2011. A potential bidder claims that the Royal Navy and the Royal Air Force will follow suit should the contract prove successful. The source suggested that groups such as Serco (SRP.L), Manpower and VT Group (VTG.L) could be among the bidders.