Luard in line for pounds 6m windfall as Flextech signs BBC deal

Roger Luard, chief executive of Flextech, was yesterday in line to net more than pounds 6m from the sale of shares and the exercise of options as the satellite and cable broadcaster announced details of its pay- TV joint venture with the BBC. He will also receive a pounds 250,000 bonus on completion of the BBC deal.

BBC Worldwide, the BBC's commercial arm, stands to gain income of more than pounds 600m from the launch of up to eight pay-television - but not pay- per-view - channels in Britain and abroad within a few years, according to TCI, Flextech's US parent. It is believed to be the first time the BBC has taken a direct equity stake in a quoted company.

The deal with Flextech to develop the subscription channels marks the BBC's most significant step in commercial broadcasting. But deputy director general Bob Phillis, chairman of BBC Worldwide, insisted there was no risk to licence payers' money and that commercial advertising would not be associated with the BBC brand.

"I want to make it quite clear that where programmes are funded by the licence fee, they will always, always be seen first on BBC1 or BBC2," he said.

The deal involves the creation of two joint ventures to combine the BBC's archive, scheduling and production skills with Flextech's funds and multi-channel TV management and marketing knowledge. The vast majority of the programmes will be repeats, though some joint programme production is envisaged a later stage.

The main deal will be to develop and launch mainly digital new pay-television channels in Britain. The second involves buying out and developing in analogue, and later in digital formats. Flextech and BBC Worldwide will take a 50 per cent stake in the two ventures for up to 30 years. The service will be rolled out later this year.

Flextech is contributing pounds 22m of equity and can make pounds 118m in credit facilities available.

Flextech, which also reported virtually unchanged pre-tax losses before exceptional credits for1996 of pounds 16.8m, is buying out pay-TV channels UK Gold and UK Living by issuing 35 million shares to its owners, media groups Pearson, America's Cox Communications and BBC Worldwide. The deal is worth about pounds 270m and values UK Gold at about pounds 210m and UK Living at pounds 104m.

In return, Cox, Pearson and BBC Worldwide will take 13.3, 5.6 and 3.5 per cent stakes respectively in Flextech.

Mr Luard plans to exercise options, granted at 92p, over 600,000 shares and sell these, together with more than 305,000 shares he already holds. Last night shares in Flextech closed down 21p lower at 751p.

Comment, page 21

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