Pearson may pull out of Sky

MATHEW HORSMAN

Pearson, the media and information conglomerate, looked poised yesterday to accelerate its expansion into television production, hinting that it might allocate further funds to finance the high-stakes strategy of its TV chief, Greg Dyke.

Announcing a review of its 14 per cent stake in BSkyB, the satellite broadcaster, Pearson said it might sell a 9.7 per cent holding worth pounds 500m through a secondary share offering.

The news immediately sparked speculation that Pearson would expand further into television and multimedia, under a strategy developed jointly by Pearson's chief executive, Frank Barlow, and Mr Dyke, formerly head of London Weekend Television.

Shares in both Pearson and BSkyB climbed on the news. If the sale goes ahead, BSkyB will have a large enough public shareholding to be eligible for inclusion in the FT-SE 100 index, with improved trading prospects.

Analysts had been expecting the announcement. "They haven't got a huge influence with only a 14 per cent stake," Robert Jolliffe, media analyst at Hoare Govett, said.

Pearson is looking to expand in the production and distribution areas. It already owns Thames Television, the independent production company, and Grundy Worldwide, the Australian producer of hits such as Neighbours, bought earlier this year.

Along with its partner, MAI, the media and financial services company, it is also a bidder for the licence to operate the new Channel 5, scheduled to be awarded in September.

Some analysts expressed concern about Pearson's past acquisition policy, saying the company had overpaid for key holdings. They said the pounds 175m paid for Grundy was a case in point.

Pearson, which earlier this month was hit by two profit downgrades by City institutions, also owns publishing houses, regional newspapers and the Financial Times.

Analysts said part of the proceeds from any sale of the BSkyB stake could be used to raise the company's stake in TVB, the Hong Kong-based broadcaster in which Pearson holds a 10 per cent interest. Other options might include buying electronic media companies, particularly in the US.

Sources at both Pearson headquarters and Pearson Television cautioned that the proceeds would not necessarily be spent on expanding the company's media interests."The money would go into the corporate pot," a spokeswoman said.

Pearson's 9.7 per cent stake in BSkyB was worth pounds 547m yesterday, but the company would have to accept a discount to the market price in order to place the shares and would incur advisory and other costs.The company's total investment in BSkyB was carried on the books at pounds 130m, while it has received dividends of pounds 192m.

BSkyB's 40 per cent owner, Rupert Murdoch's News Corporation, privately applauded the announcement. Relations between Pearson and News Corporation have been cool, particularly since Mr Barlow was removed as chairman of the board at BSkyB earlier this year.

Granada, which holds 6.5 per cent of BSkyB, signalled that it would not be interested in raising its stake.

A judgment in the long-running court case brought by BSkyB minority shareholder London Merchant Services, the investment and property group, is to be handed down on Friday and could affect Pearson's plans to sell its 9.7 per cent stake in the satellite broadcaster.

LMS has accused former shareholders of British Satellite Broadcasting - an earlier broadcaster - of treating minority shareholders "unfairly." LMS says the minorities were not allowed to subscribe to new equity to maintain their share stake when the company was restructured and subsequently merged with what was then Sky TV to create the BSkyB company.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

Day In a Page

General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
Public relations as 'art'? Surely not

Confessions of a former PR man

The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

Bill Granger's luxurious sweet treats

Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

The mother of all goodbyes

Paula Radcliffe's farewell to the London Marathon will be a family affair
Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

Steven Naismith: 'We know we must do better'

The Everton forward explains the reasons behind club's decline this season
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions