United Business Media undervalued
according to investment bank

Morgan Stanley says its exit from the FTSE 100 could be good for its shares and that relegated stocks outperform the index.

United was squeezed out of the FTSE 100 last week when mm02, the wireless business spun out of BT, made its debut on the London Stock Exchange.

United, the former ITV company which sold its franchises to Carlton and Granada, has restructured its business to focus on information, publishing and market research.

Although its CMP Information unit has been hit hard in the US by the downturn in advertising, its information business, which includes NOP and PR Newswire, has performed better.

Meanwhile, ITV company Carlton Communications has had its senior debt rating cut by three levels to BAA2 by ratings agency Moody's Investor Services.

The decision by Moody's follows its rivals Standard & Poor and Fitch, which have also downgraded the company recently.

Moody's said it made the downgrade based on the "sharp cyclical downturn in UK TV advertising which will likely continue to be felt during 2002".

These comments will dampen industry optimism that the sector could rally in the run-up to Christmas.

Moody's went on to criticise ITV Digital, adding the "heavy residual investment" required to establish the digital terrestrial broadcaster to its reasons for making the downgrade.

Carlton's shares fell 5.7% yesterday on news of the downgrade, but rallied again this morning on the news that ITV has finally signed up for carriage with BSkyB in a deal believed to be worth around £13m a year.

Carlton rose 0.6% this morning to 233.5p, its ITV partner Granada was up 6.96% to 146p. BSkyB rose 2.2% to 834.5p.

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