POLYGRAM ENTERTAINS CITY WITH MUSIC PROFITS UP 44%.

Polygram, the Dutch entertainment giant recently bought for USD10.4bn (GBP6.2bn) by Canada's Seagram, surprised analysts with a 44% jump in profits at its troubled music division. The results, buoyed by strong sales from artists such as The Beautiful South and Sheryl Crow, helped shares in EMI, PolyGram's embattled British rival, rise nearly 5% to 359p, compared with their high of 738.5p in 1996. The sale of PolyGram - currently controlled by the Dutch electronics giant Philips - is likely to be completed by the end of the year. Yesterday's results reassured analysts that the deal would go ahead at the price previously agreed. Overall, PolyGram's net sales for the three months to September 30 remained unchanged at 2.7bn guilders (about GBP841m), while pre-tax income rose 18% from 127m guilders to 151m guilders. One analyst said: "The figures are outstanding. The bottom-line is distorted somewhat by several one-off items, but the operational income is far more important. Improving its margin to 11.4% from 8% last year, the music business has done very well for a third-quarter."Both PolyGram and EMI have recently issued profits warnings, thanks to the economic turmoil in South East Asia and other emerging markets. Even Western music markets have been sluggish...