The Investment Column: Daily Mail reaps its rewards

Lord Rothermere has been pouring money into the Daily Mail and The Mail on Sunday at the expense of Lord Hollick's rival Express newspapers for such a long time, that it is high time he started reaping the rewards.

Yesterday, there were rewards aplenty for all investors, with pre-tax profit for the year to September ahead 68 per cent to pounds 143.7m. That inspired virtually every analyst in town to upgrade their forecasts. The price of the company's A shares - not controlled by Lord Rothermere - rose 67.5p to 1875p.

Newspapers were the main impetus for growth. Newsprint prices fell 18 per cent on average and advertising revenues across the two national papers and the Evening Standard rose 12 per cent. Much of the advertising growth came from yield - extracting more money per ad - enabling the company to squeeze the maximum cash out of advertisers without having to spend more on extra pages.

Northcliffe Newspapers, the regional paper division, also had a good year and, like the nationals, managed to improve circulations. Advertising revenues were also ahead 13 per cent. Much of Northcliffe's future performance depends on whether it responds to United News & Media's approaches about the sale of Lord Hollick's regional titles, United Provincial Newspapers. Such a move could prove risky and expensive. However, buying the whole of UPN looks unlikely given a lack of synergies between the two companies.

Apart from Euromoney Publications, the specialist magazines and conference business which announced record results earlier in the year, DMGT's other divisions have a slightly less certain future.

DMG Radio has run up against the regulators in the UK so far. While its tie up with Chris Evans to bid for the North West radio franchise could lead to further involvement with the DJ-turned-radio magnate, further opportunities in UK radio look scarce. However, DMG Radio has approached the Radio Authority about buying a further 14 per cent of in Essex Radio. If approved, the move would lead to a takeover, as DMG already owns 27 per cent of the group. It is also flirting somewhat dangerously with television via its local cable venture, Channel One.

Teather & Greenwood forecasts pounds 168m next year. That would leave the company on a forward p/e ratio of 17.8, a 12 per cent premium to the market. Not cheap, but still worth tucking away in the medium term.