THE development of electronic publishing was seen by media companies as positive in allowing them to move towards fee based earnings, such as content, information and advertising, whilst removing a significant cost factor - the "hard copy".

However, companies are starting to realise that the information revolution is more of an evolution with existing media formats likely to be around for some time and providing the greater part of media profits for the foreseeable future.

The combination of slowing economic growth, particularly in the US, together with anticipated increases in the price of newsprint should favour media companies with exposure to educational and professional publishing and digital television, rather than companies exposed to newspapers, consumer magazines, music and radio. The following four companies look well placed for the future.

Pearson, which has transformed itself into the world's largest education and testing company. With the expanding market for Web-based educational products, Pearson is well placed to benefit from this potential growth area.

Once the acquisition of Harcourt is complete, Reed International will become not only the largest scientific, technical and medical publisher, but also the global leader in business publishing and number two in legal publishing. Reed will also be a significant educational publisher, giving the group an active involvement in the main growth areas.

Reuters is the world-leading supplier of real time financial information and operates various electronic dealing services. Reuters is predicting that the Internet will provide it with a lower cost of delivery and an expanded customer base.

BSkyB now has about four million UK digital customers. Advertising revenue is not a significant issue and of more importance is the average spend per subscriber, increasing through interactivity and pay per view. Strong subscriber growth is expected to continue and the cost of rolling out its set top boxes will start to ease from next year.

James Lindsley - Investment Manager

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