Media Money: City punishes Independent publisher

Interesting reactions among media stocks to today’s government announcements.

This afternoon, the FTSE 100 is down by around 2.5% on the day. But look at Trinity Mirror: up by 23.8% at one point this afternoon, the company’s stock is now showing an intraday gain of 13.6%. Johnston Press, meanwhile, is up by 7.7%.

By contrast, Independent News & Media has fallen by 1%. United Business Media is down by 1%, too. Daily Mail & General Trust is up by a meagre 0.85%. The big international ad agencies WPP and Aegis are both down.

Plainly, however, the market is suggesting that the Brown-Darling rescue package will be good news for companies who make most of their money within the UK.

Of course, this is a superficial response. Today has been massively volatile. We’ll need to wait a few days to see what happens to inter-bank lending. Then we’ll get the markets’ considered reaction.

For now, however, it’s worth noting that Independent News & Media – a heavily globalised company if ever there was one – has lost one-third of its value since 1st August.

As I noted a few weeks back, the company’s outsized presence in Ireland and Australia is causing jitters. So it should be.

The Irish economy has hit the buffers, leading the Eurozone into recession during Q2. In Dublin, the government is preparing the mother of all hairshirt budgets. The country’s Central Bank is currently predicting that recession will continue for ‘at least’two years.

In Australia, there are mounting concerns about the effects of an Asian slowdown. Today, the Australian government cut interest rates by 1% – the largest cut in 16 years.

The suggestion that Independent News & Media needs to refinance a €200m bond next May hasn’t helped, either.

Between them, Australia and Ireland account for 75% of INM’s revenues – and a bigger proportion of operating profits.

In IN&M, the media sector seems to have found a new whipping boy.

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