As well as the inability to garner significant advertising sales, MCE said yesterday that its other revenue source - a subscription paid to it by television companies for carrying MCE channels - was also drying up.MCE provides audio-only music channels that are played out on television platforms, such as Sky, with no interruptions by a DJ or advertisements. It is thought that another £30m was put in before the listing. Floated at the height of the internet boom in 2000, the company has failed to pull in the advertising envisaged at the time. Sky is the biggest shareholder in MCE, with a 36 per cent holding after the listing, while the original investors in the business, Time Warner and Sony, now have 16 per cent and 8 per cent respectively. The company raised £50m from its flotation, which was handled by Investec Securities. Music Choice Europe, the digital music company backed by Rupert Murdoch's BSkyB that was once worth more than £200m on the stock market, has been sold for just £2.7m. This was still much faster that the growth in the country's total output, which rose 5.5 per cent to £981.7bn.The fastest growing industry over the period from 1992 to 2003 was computer and related services, weighted in terms of percentage and value change in monetary terms. The growing trend for eating out meant spending in restaurants jumped by 90 per cent from 1992 and 2003 to £82.2bn, outpacing the rate of growth in overall household consumption.While the hotels, catering and pubs industry was among the 10 fastest-growing sectors during the decade, growth in agriculture and food processing has failed to keep pace with that of the whole economy..
Banks, insurers and computer services firms saw their share of total economic output soar to 31.7 per cent in 2003, more than twice the 14.8 per cent contribution from Britain's manufacturers, who are still bleeding jobs. Five years ago, the manufacturing sector's contribution was 20.1 per cent. Retailers and wholesalers overtook manufacturing in terms of their economic input, contributing 15.7 per cent of the economy in 2003, the Office for National Statistics said.The total output of the business and financial services sector surged 8.4 per cent from 2002 to 2003 to £310.9bn, slower than the 12 per cent growth it recorded the previous year. The business and financial services sectors are twice as valuable to the UK economy as the beleaguered manufacturing sector, official figures published yesterday showed. Mr Kelly said: "We were never 100 per cent decided on an IPO. Permira approached us with an aggressive price that we felt maximised returns to shareholders."He also said the refinancing deal meant Gala had additional firepower to start buying up other businesses in the gaming sector, which is ripe for growth following the passing of the Gambling Act earlier this year. The Act has capped the number of casinos allowed in the UK, protecting the interests of existing operators against the threat of new competition, and will allow casinos to advertise for the first time.
Also, Gala's bingo halls will be able to roll over prize money to create bigger jackpots, which should attract more customers to the game.Candover and Cinven have enjoyed high returns from their investment, having bought the company only two years ago from CSFB. An impressive run of results from the company, which is seeing a resurgence in interest in bingo, helped Gala repay half its debts to the private-equity houses only 18 months after the takeover.Gerard Conway, of Candover, said: "We are very pleased with our investment so far and we believe there is lots more growth to come from the company and from the sector."This deal allows us to realise some of our investment at an attractive valuation while also leaving us invested for the upside.". It had been gearing up for a public listing and had called in investment banks to take part in a beauty parade for the float business. A number of gaming companies have listed or are in the process of listing on the stock market this year amid in a boom in the sector, and Gala had hoped to capitalise on investor appetite for gambling stocks.But the company said it could not turn down the approach from Permira, which it says values the business higher than it might have been achieved by a float. Permira has joined two private-equity houses, Cinven and Candover, as a major shareholder in Gala, which is now valued at £1.9bn. Cinven, Candover and Permira now hold roughly 30 per cent of Gala each, with the rest split between staff and directors. John Kelly, the chairman of Gala, said management had sold some of its stake to Permira, but he and the team remained "significant" shareholders in the business.The sale means that plans by Gala to float by the end of the year have been shelved.