THE GLOVES are off. After months of shadow boxing, battle proper for Britain’s digital TV future has commenced. Perhaps predictably, it was Rupert Murdoch’s BSkyB that struck the first blow, and though there is a fair degree of marketing hype in its initiative, it was none the less quite a punch. Other similarly timed announcements from the two main rival digital platforms, ONdigital and Cable & Wireless Communications, were left looking limp by comparison. ONdigital is getting in before Sky by offering free set top boxes too, but only to those who buy a new TV. Cable already offers a free box, but the digital release doesn’t begin until June and won’t be fully national until March next year.
As it happens, cable is Sky’s main target here, not ONdigital, but Carlton and Granada’s terrestrial platform is badly caught in the cross fire.

There is no option but to match Sky’s costly promotions blow for blow. Neither of its shareholders are short of a bob or two; whether or not this is predatory pricing by Sky, Carlton and Granada are big boys, both used to and presumably prepared for the rough and tumble of a long business fight. They both have direct experience of Mr Murdoch and know he doesn’t take prisoners.But as the stock market correctly surmised by marking Carlton’s shares down so heavily, the fledgling ONdigital is going to find the cost of a prolonged price war more difficult to absorb than Sky, with its existing substantial subscriber base.Sky is a focused pay TV business with an existing and considerable vested interest in migrating its analogue subscriber base to digital. Carlton and Granada are new to the business, and both have other calls on their time and money. Sky’s initiative has to mean the cost of the ONdigital experiment will escalate quite substantially; at this stage we can only guess at by how much.None of this necessarily means we are faced with a replay of the head to head battle between Sky and British Satellite Broadcasting in the 1980s, which ended with Sky absorbing BSB.

ONdigital is still a different enough pay TV offering, in terms of access if not product, for it to be able to coexist with Sky. Even so, breakeven and payback are plainly delayed, possibly by some years.The bigger threat to Sky was always going to be cable, which after years of shambolic management and marketing, looks finally like getting its act together. Able to offer both TV and broadband telecommunications, its digital offering ought to be superior to Sky’s – more, faster and better in interactive functions. Furthermore, to the extent that Sky continues to add conventional subscribers, they tend to come almost wholly through cable. Long term, this cannot be good for Sky, whose present pay TV monopoly depends on a stranglehold on both product and distribution.So Sky’s move looks as much defensive as aggressive. Its digital satellite platform needs to find some way of heading off the threat from cable. Price wars are usually quite damaging to shareholder value, but they are plainly good news for consumers, especially when conducted among three players all determined to stay the course This is how competition is meant to work.

Maybe we should be thanking Mr Murdoch for finally giving us a taste of it in pay TV.. NYCOMED AMERSHAM, the world’s leading maker of medical imaging products, yesterday agreed to sell a 70 per cent stake in its pharmaceuticals business to Nordic Capital, a Swedish private equity investor, for pounds 275m in order to focus on its main businesses. The company said it would use the proceeds to cut its debt by about half, giving it more scope to expand its business in diagnostic products.
Nycomed, formed by the 1997 merger of Norway’s Nycomed ASA and Amersham International, said last year it planned to sell its pharmaceuticals unit, Nycomed Pharma, which generated 19 per cent of its pounds 1.39bn sales in 1998.Analysts said the price was low but the sale was needed. “There is slight disappointment about the price, but it gets them out of a non- core business so they can focus on core areas,” said Ian Smith, an analyst with Lehman Brothers.Nycomed shares rose by 2.5p to 504.5p yesterday.Nordic Capital and Nycomed said they had formed a new company to acquire the drug unit, with Nycomed paying pounds 21m for a 30 per cent stake.With a pounds 44m loan Nycomed will make to the new company, the transaction is worth pounds 340m.. SELECT APPOINTMENTS, the fast-growing temporary recruitment specialist, continued its good run with yesterday’s strong first-quarter figures, reflected in a soaring share price. The shares closed up 37p at 837p after the group unveiled pre-tax profits of pounds 14.2m for the three months to 31 March, a 39 per cent rise on the previous year.
Analysts welcomed the results, particularly praising the group’s 22 per cent organic growth rate. Six acquisitions have also been made this year, leaving Select with 68 new offices around the world and a foothold in two new markets, in South America and Finland.Tony Martin, chairman, put the performance down to the company’s diverse structure which he said would also serve to insulate it from the threat of economic downturn.”Our solid performance is down to the way we’re structured, dealing with 18 sectors in 25 countries.

Diversity eliminates risk,” he said.Around 40 per cent of the group’s business comes from IT recruitment, though Select also covers accountancy, healthcare and teaching.Mr Martin added that structural changes in the workplace favoured both the growth of temporary work and the type of specialist business on which the IT-orientated group focuses.”Worldwide this is a pounds 64bn business, growing at a rate of 14 per cent every year Six years ago it was only half the size. People now plan for a flexible workforce,” he said.David Greenall, an analyst at Credit Suisse First Boston, said: “There is a trend towards this kind of work and we’ve seen deregulation of the sector in Europe. These companies will grow even in bad economic conditions.”Analysts forecast full-year pre-tax profits of pounds 77.2m which puts the shares on a forward multiple of 18 Good value, analysts say.. SIR GEORGE MATHEWSON, chief executive of Royal Bank of Scotland, yesterday backed his case for a merger with Barclays Bank by announcing a 19 per cent rise in pre-tax profits at the halfway stage. The headline numbers came in a touch ahead of City forecasts at pounds 531m, up from pounds 448m in the period last year, largely as a result of strong growth in both corporate and personal lending by the bank.
Fred Goodwin, the deputy chief executive, said that strong growth in both corporate and personal lending was driving the profits growth across the board.Mr Goodwin also took satisfaction from the performance of the bank’s new business lines, including the supermarket banking joint venture with Tesco, which had managed to add on new customers at a rapid rate while reducing losses from pounds 37m in the first half of 1998 to pounds 25m this time.The half-year results included a full contribution for the first time from Angel Trains, the rolling-stock leasing business, while the credit cards side of the operation has been broken out as a separate business line following the merger of RBS Advanta with the bank’s existing cards business last year.Mr Goodwin said: “What we are pleased about is that the rise comes from what was already a very high base. The performance of the UK bank can comfortably be described as motoring,” he said.Most of the lending growth came in the corporate market sector, where the bank took a brave decision to continue lending when other banks withdrew from the market altogether following last autumn’s stock market crash and the bond market shutdown.As a result of this decision, the bank saw lending to the corporate sector rise by 21 per cent to pounds 4.6bn. Personal advances were also up, by 32 per cent to pounds 1.6bn.Mr Goodwin insisted that the growth had been achieved without sacrificing the group’s lending criteria.