Focusing on leisure is risky for Rank

Putting pounds 50,000 into what was then the new business of photocopiers in the 1950s stands out as one of the greatest corporate investments of all time. On the basis of Rank's conservative pounds 930m book valuation of its remaining interest in Rank Xerox, that initial punt on an interesting new technology is today worth the best part of pounds 5bn.

Getting rid of the rump stake makes good sense both strategically and financially, but focusing on Rank's leisure and entertainment core makes the company considerably riskier. Not least because if you add in the pounds 300m proceeds of other planned disposals, the new chief executive, Andrew Teare, has a worryingly fat chequebook to go with his understandably sketchy knowledge of the leisure business.

If he spends that money wisely, Rank could return to the top table of the British leisure industry from which it has been notably absent for years. But no one should underestimate the challenge, given the uninspiring springboard the rest of the group provides.

Best of the bunch is probably film duplication, and if Hollywood continues to churn out films like Independence Day and Mission Impossible, Rank will have no problem shipping at least the current million or so videos a day. The digital revolution means the video tape's day is numbered however, and this is probably a case of making hay while the sun shines.

Elsewhere Rank is like a snapshot of 1960s Britain, with a stable of squandered, underinvested and tired brands. Odeon, Butlin's, Top Rank, Mecca - it's hardly the starting point of choice for a man setting out to rebuild a leisure giant.

Hard Rock appears to have become the focus of Rank's attentions. Again buying in franchise operations and working the brand hard with spin-offs such as branded music venues and a record label make sense, but this is a 25-year-old brand where like-for-like sales in the first half were actually lower than in 1995.

It would be churlish to judge Andrew Teare after just three months in the job. But the honeymoon period is certainly over, as the 6 per cent fall in his share price yesterday amply demonstrated. Leisure and going out are destined to remain very high growth areas of consumer spending but finding the formula that attracts the punters remains as hard as ever. Mr Teare might do better to return the Rank Xerox cash direct to shareholders than to embark on a reckless spending spree.