Chrysalis delays sale of books arm

Chrysalis' plans to sell its books business have had to be put back after the business published too many loss-making books.

The media group is trying to sell non-core assets, with talks under way to dispose of its television business. It was widely thought that books would be next, leaving the company with its interests in music publishing and radio, where it owns the Heart and Galaxy stations and LBC in London.

However, Chrysalis shocked the City yesterday when, reporting interim results, it revealed that the books division had fallen into the red. Performance elsewhere in the group was applauded by analysts.

The company quietly replaced the management of books in December when the problem was uncovered and set about a full strategic review of the business.

Richard Huntingford, chief executive, said: "There was a disappointing margin performance [in books]. They were focusing too much on unprofitable books, with too many titles ... it's irritating."

The division, which publishes non-fiction books, put out around 550 books last year, which the company said was "a hundred too many". Books made a loss of £500,000, for the six months to 28 February, compared with a profit of £1.4m the previous year.

Mr Huntingford insisted the necessary restructuring of the business had been carried out and it would return to profit in the second half of this financial year.

Richard Menzies-Gow, analyst at Dresdner Kleinwort Wasserstein, said: "This has come out of the blue. It delays the sale of books but I still think they'll look to sell it in the next 12 months. They appear to have spotted the books problem early and action was taken quickly, hence the impact looks limited."

Mr Huntingford did not admit that the plan was to sell off books but said: "We have been applying increasing focus across the group to those areas where we outperform." He said that, aside from TV, the group has received no other approaches.

Paul Richards, analyst at Numis, said that he had valued books at up to £40m but if Chrysalis tried to sell it now, it would be lucky to get £30m. The division's turnover in the first half was £14.8m.

"TV and books drags down the quality of the group," said Mr Richards.

Group pre-tax profit jumped to £9.0m, from just £648,000 last time, but this included an exceptional profit of £6.3m on the disposal of its Galaxy 101 radio station. Television profits more than doubled, while radio profits were up 20 per cent.

On current trading, the group said like-for-like revenues at Heart and Galaxy stations were 7.7 per cent ahead in March and April. The group's shares rose 3p yesterday to 207.5p.