The incestuous vortex of cross-promotion

OK! TV is the latest addition to the bewildering circle-jerk that is Richard Desmond’s media empire.

"OK! TV kicked off to a triumphant start," said OK! magazine this week in an interview with the OK! TV host Kate Walsh. The Channel 5 show could be glad of one positive review, at least, even if the more cynical among us might suspect that due to printing deadlines it may have been written before the "triumphant start" had even gone to air.

But then this is the bewildering circle-jerk that is Richard Desmond's empire right now. OK! TV, Channel 5's new brightly coloured approximation of a couple of vapid office drones chattering about celebrities over a water cooler, promotes OK! magazine. The Daily Star and Daily Express promote OK! TV and OK! magazine, as well as giving remarkably positive reviews to the likes of the Channel 5 host Vanessa Feltz; OK! magazine has a two-page feature telling you what's coming up this week on Channel 5 . . . and so on, and so on.

"We are beyond excited by the launch of OK! TV," said the magazine's editor in a leader this week. Beyond excited!

The incestuous vortex of cross-promotion gets to the point where if you see something in a Desmond publication that isn't anything to do with another of his assets, you wonder why it's there at all. And which one is meant to be the flagship? Is Channel 5 the jewel in the crown, or is it OK!, or the Daily Express? Or are they all fighting for the title of least mediocre? It's hard to tell.

It was my own fault, really. I'd decided to watch OK! TV while reading a copy of OK! magazine. I think I got overloaded by it all. But one thing I did notice was that I was reading more than I was watching. I ended up being fascinated by Josie Gibson's Big Fat Gypsy Wedding photo shoot, leaving Kate Walsh and Matt Johnson babbling away in the background.

Of course, this being a Desmond publication, the photo shoot is to tell you that Gibson is a reporter on . . . yes, you guessed it, OK! TV. But even as someone who isn't the target audience of the mag, who couldn't really care less about celebrity culture and all the trashy awfulness therein, I found her tales of growing up in a traveller family (hence the giant pink dress and caravan) quite intriguing.

OK! TV, in comparison, is pretty shabby. Gibson is, by a bus ride, the best thing about it, chirping merrily away about celebrity tweets in that delightful Bristolian burr ("Shane Warne, he's a blancmange, in't he?"), but her segment was a rare moment that strayed beyond the otiose. The rest just makes you yearn for the understated subtlety and class of the show's predecessor, Live from Studio Five.

Besides, they're missing a trick. If they called it Daily Star Daily Express Sunday Express New! Magazine Star Magazine Daily Star on Sunday OK! TV, they'd be able to promote even more Northern & Shell goodies at one go. Surely it's only a matter of time.

Patrolling the murkier waters of the mainstream media
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Why might you invest in Europe?

At Henderson we believe the European market is a fertile hunting ground for investment opportunities. The market’s depth and breadth, with its regional variations and, at times, political uncertainty, means our fund managers have plenty of choice when it comes to picking stocks. Two of our investment trusts with a European focus include Henderson European Focus Trust, managed by John Bennett, Head of European Equities, and Henderson EuroTrust, managed by Tim Stevenson, Director of European Equities. Here we explore some of the factors that make the continent attractive.

1. The ECB’s continuing support

The euro area could claim only but a few fans a year ago. Investors fretted over deflation and depression, spurred, ironically, by the collapse in oil prices. What followed was a European Central Bank (ECB) showing willingness to explore extraordinary monetary policy measures, beginning a massive quantitative easing programme, initially involving monthly injections of €60 billion into the system and recently increasing to €80bn, through the purchasing of government and corporate debt with the aim of driving down interest rates, stimulating bank lending, getting the Eurozone economy moving again, boosting investment, creating jobs, and fighting off the spectre of deflation.

While not the saviour of Europe’s underlying structural problems, Europe’s markets appear set to benefit further from the ECB’s continuing loose monetary policies, with inflation well below the central bank’s target of 2% and QE likely ending in 2017, coming right at the point when the US and UK are on course to diverge and tighten theirs.

2. Currency weakness is helping all round

The ECB’s action has coincided with a substantial fall in the value of the euro. The chart demonstrates the Euro’s value against the dollar:

Chart 1 – The value of the euro against the dollar remains low relative to history

Source: Thomson Reuters Datastream, as at 18 April 2015

This is a great stimulus for European exporters, whose products and services become cheaper and more competitive in overseas markets, boosting exports to the US and UK at the same time as insulating others against the downturn in emerging markets. Ultimately this should feed through to better sales and profits.

3. Low oil prices

A sustained period of low oil prices would be a major positive for most European economies, putting more money into the pockets of consumers, while also helping to reduce the region’s notoriously high energy costs – Europe is the world’s largest net importer of oil and related products (approximately $406 billion in 2014). There are concerns, however, that lower oil prices could fuel a deflationary trend, while falling oil prices have had a negative impact on oil producers and oil services companies based in Europe.

Chart 2 – Falling oil prices - good for businesses and consumers, but possibly deflationary

Source: Datastream, Brent crude oil price, US dollars per barrel, as at 18 April 2016

 

4. Valuations remain relatively attractive when compared to the US

As mentioned, Eurozone stock markets have had a great run, and they’re certainly no longer as cheap as they’ve been in recent years. However, says Jason Hollands of broker Tilney Bestinvest, they remain “relatively attractive compared to US shares”.

Stock-picking remains key. The prodigious appetite for alternative income amid low yields and low interest rates, not-to-mention also quality stocks, means price ratios, a measure of how expensive stocks are relative to history, are being propelled ever higher. Rising share prices also mean fund managers need to be increasingly selective in building their portfolios – so it makes all the more sense to channel your money through a highly regarded European manager with a reputation for successful stock-picking.

Indeed, John Bennett, European fund manager at Henderson Global Investors, believes stock-picking is set to become all the more important in coming months.

“2016 has already seen a significant pick-up in volatility, so investors should brace themselves for difficult markets”, he says. “That is why I think stock picking is so important. By understanding a company’s strengths and weaknesses, we can seek to be better positioned than the general market both in good times and bad.”

 

5. Companies have reach beyond Europe

The global reach of European companies is evident in the breadth of their sources of revenue, with European-listed businesses deriving just over half of their revenues from overseas. This allows European fund managers to pick the companies with exposure to the regions with the most compelling opportunities – both domestic and global. It means that if the businesses are well managed ones – which our fund managers aim to pick – they can continue to outperform in falling as well as rising markets.

 

6. Companies are buying one another

Merger and acquisition (M&A) activity picked up steadily in 2015 and has continued into 2016, with Europe registering its highest level of deal activity since the 2007/2008 financial crisis. CEOs tend to open-up their corporate wallets when they’re feeling more confident about the business environment or the economy or when finance is cheap. In Europe deal volumes have been boosted by a combination of low oil prices, the strong US dollar and optimism about Europe’s economic prospects - a positive sign.

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Before investing in an investment trust referred to in this document, you should satisfy yourself as to its suitability and the risks involved, you may wish to consult a financial adviser.

The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.

Nothing in this document is intended to or should be construed as advice.  This document is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment.

Issued in the UK by Henderson Global Investors. Henderson Global Investors is the name under which Henderson Global Investors Limited (reg. no. 906355), Henderson Fund Management Limited (reg. no. 2607112), Henderson Investment Funds Limited (reg. no. 2678531), Henderson Investment Management Limited (reg. no. 1795354), AlphaGen Capital Limited (reg. no. 962757), Henderson Equity Partners Limited (reg. no.2606646), Gartmore Investment Limited (reg. no. 1508030), (each incorporated and registered in England and Wales with registered office at 201 Bishopsgate, London EC2M 3AE) are authorised and regulated by the Financial Conduct Authority to provide investment products and services.