268 VCG FOR SALE
November 29, 1999
United News & Media, (UNM) parent of Visual Communications Group (VCG), and
Carlton Communications have
announced a £7.8 billion ($12.6 billion) merger that will create a powerful
force in independent television in the UK.
The new group will divest several businesses, including Technicolor, Carlton's
video duplication business, United Advertising & Periodicals, VCG and selected
non-core assets of Miller Freeman and Carlton's products division.
The two companies are about equal in size with Carlton valued at £3.5 billion
and UMN at £3.7 billion at last week's close. The two ITV companies
may control more than 25% of the national television advertising revenue in the
In their June 30, 1999 quarterly report UNM said that VCG had £27.7 million
($44.5 million) in gross sales in the first six months of 1999. This was down
from £28.2 million ($45.3 million) for the same period in 1998. If they
have similar results in the last half of 1999 gross sales will be under $90
million for the year with a downward trend.
Profits for VCG dropped to £2.1 million from £3.5 million in the previous
According to Andrew Nugee, VCG CEO, "The decision does not in any way reflect a
lack of confidence in VCG, its staff or its strategy. In fact United has made
considerable investment in the business over the last twelve months and as a
result we are in good shape to face the future."
Falloff In Sales
The falloff in sales may be significant since we reported in October The Image
Bank's sales of still images was also off for the first half of 1999. This means
that the number two and number three companies in the industry both had a drop in
sales in the first half of 1999. Neither of these companies has a strong royalty
free segment to their business.
Getty Images reported growth in the first half of 1999, but a significant portion
of their revenue comes from the world's top selling Royalty Free company,