Flextech sacrifices profits for expansion

Flextech, the high-flying cable and satellite programme packager, is unlikely to make operating profits in the medium term, its chief executive, Roger Luard, said yesterday.

"We will continue to expand and to seek value for our shareholders," he said. "If we wanted to, we could be profitable within 12 months with our current operations, but we choose to continue to expand."

The company, which owns or manages cable and satellite channels such as Discovery, Playboy and Bravo and has a 20 per cent stake in Scottish TV, yesterday unveiled its latest acquisitions, including the buyout of the 61 per cent of the Family Channel it did not already own -along with associated studio facilities - for a combined price of pounds 30.5m, payable in shares and pounds 3m cash.

The company, owned 50.1 per cent by Tele-Communications International, a subsidiary of the US cable giant TCI, is also buying a controlling interest in the "infomercial" business of the Home Shopping Network, which will give the UK company a share of joint venture operations in Asia, France, Spain and Brazil.

The news came as Flextech unveiled profits after exceptional items of pounds 16.4m, compared with a loss last time of pounds 18.5m. The figures were swelled by a one-off gain of pounds 33.2m after the sale of the cable franchises held by the company's IVS Cable Holdings. Stripping out the sale, operating losses were pounds 16.8m.

The company intends to expand further in 1996, Mr Luard said, pointing to the planned launch of the Sega channel in mid-1996. The channel, which will allow unlimited use of 16-bit Sega games for about pounds 10 a month, is expected to cost pounds 1m to set up and be profitable in its second year, Mr Luard said. At least 25 games are expected to be available each month.

Purchase of the remaining stake in the Family Channel would be followed by consolidation of the company's other programming stakes "as and when possible." Flextech is a partner, with the BBC and Pearson, the media and leisure company, in UK Gold, a popular pay-TV channel.