MAI buys Pearson's Yorkshire TV stake

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The Independent Online
Pearson, the information and entertainment company, has sold its entire 14.8 per cent stake in Yorkshire-Tyne Tees, the independent television company, for £41.3m. The buyer is MAI, the financial services and media holding company chaired by Lord Hollick, which already owns Anglia Television and Meridian, the licence holders for the South, South-east and East of England.

The sale comes before anticipated relaxation of cross-media ownership rules. It is thought the Government's White Paper will be unveiled on 25 May.

Announcing the sale, Pearson Television chairman Greg Dyke said: "We have decided that a 14 per cent stake in a regional broadcaster is no longer of any strategic interest to us."

A company spokesman said the decision to sell the stake was taken only last week, after a bid for the new Channel 5 licence by Pearson and MAI was deposited with the Independent Television Commission. The two companies said the deal had not been arranged before finalising the bid details.

A Pearson spokesman said the company was "increasingly optimistic" of winning the licence to provide Britain's fifth terrestrial television channel. Pearson's bid, at £22m, came in second behind a consortium led by CanWest, the Canadian broadcaster, and in a dead tie with an offer made by Virgin and several partners.

YTT stock has risen sharply in recent weeks on speculation that changes to ownership restrictions would allow newspaper groups or other independent television companies to buy a controlling interest in YTT.

The shares were sold at 500p each, a discount to the market price of 520p yesterday morning, before the deal was announced.

YTT shares rose to 538p on speculation that MAI and Granada, which has a 15 per cent stake, may battle for the company, provided ownership restrictions are liberalised.

Advisers to Pearson had argued that the Government was unlikely to substantially revise rules limiting the stakes of newspaper publishers in television companies, and that Pearson would be better to concentrate on its Channel 5 prospects. Pearson is now free to take up to 20 per cent of Channel 5.

The chances that MAI would be able to buy YTT outright were believed to be greater, the advisers said.

Pearson executives had privately expressed concerns about the way YTT was managed. The company was particularly disturbed by the departure of John Fairley, chief executive of Yorkshire Television, this month.

The Department of National Heritage is currently awaiting the results of a study done by National Economic Research Associates on how other countries monitor media ownership. Several British media companies have suggested the Government should use market share, rather than ownership restrictions, to limit concentration in particular markets.