Market report: Wednesday close

THERE is everything to play for in the media sector following the biggest shakeup in the industry for years which has accompanied the draft publication of the Communications Bill.

The Government is set to relax the rules on media ownership, and this is expected to pave the way for a corporate free-for-all with British companies being gobbled up by foreign media giants such as Walt Disney and AOL Time Warner.

City speculators chased prospective takeover candidates sharply higher. ITV Digital's joint owners attracted the buyers. Carlton Communications was 19p dearer at 272p and Granada was up 12 1/4p at 139 1/4p. Punters reckon a takeover of both companies may be the best way forward following the debacle over Digital that has cost both groups almost £1bn.

Pearson, which owns the Financial Times and 29% of Channel 4, jumped 10p to 845p, while Rupert Murdoch's BSkyB put on 20 1/2p to 751 1/2p, broker Dresdner Kleinwort Wasserstein moving from 'hold' to 'buy' with a target price of 900p. It is seen as the most likely buyer of Channel Five.

SMG, owner of Scottish Television and Grampian TV, where rival Granada already owns a 17% stake, was also singled out by the speculators. Its shares rose 3p to 170 1/2p on bid hopes. The advertising downturn has hit its profits, driving the shares down from a peak of 375p only 18 months ago.

Independent radio broadcaster Capital Radio, up 45p at 830p, also drew support. Two years ago, its shares were changing hands at a peak of 1937p. Rival GWR put on 8 1/2p at 270p along with Chrysalis, 7 1/2p to 277 1/2p, Wireless Group, 9p to 82p, Scottish Radio, 5p to 1035p and Emap, 27 1/2p to 846 1/2p. But one broker urged caution, saying: 'It will be 18 months before (the draft Bill) becomes law'.

The rest of the market clawed back some of Tuesday's hefty losses. Its position was underpinned by strong opening gains on Wall Street following Tuesday's decision by the Federal Reserve to peg interest rates and better-than-expected results from Cisco Systems. The FTSE 100 index rose 89.2 points to 5209.1.

Merchant bank Schroders enjoyed an early mark-up, touching 875p before settling 24p higher at 835p. It is a notoriously thin market and today's movement was triggered by a buyer of only 359 shares.

It was fun and games again for Vodafone shareholders before the start of official trading. One trader entered a wrong number that resulted in the price displayed on the screen soaring to 290p. It was a case of wishful thinking for many punters, who have seen the value of their investment steadily eroded during the past two years. The price later settled to trade 8 3/4p better at 104p.

Brokers were unimpressed with the trading update from Alliance & Leicester, down 5p at 932p. The mortgage lender said it expected to meet revenue growth targets.

Building services and support group MacLellan, ahead 4 1/2p at 99p, is flexing its corporate muscles with the £20m acquisition of Broadreach Group, founded by former MP David Evans - no stranger to the Square Mile. He founded Exclusive Cleaning and was chairman of Brengreen, bought by BET in 1986 and which in turn, was bought by Rentokil Initial.

Prices and indices in this section are supplied from various sources and calculated at different times and may not always match those listed on the site.

Geoff Foster of the Daily Mail on yesterday's trade
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