Retuning may cost Pearson pounds 180m

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The Independent Online
Pearson, the media and information company, will today detail a higher-than-forecast budget for the retuning of video recorders for the new Channel 5 service, with estimates ranging to as high as pounds 180m. That would compared with the original budget of pounds 55m, and the subsequent forecasts of pounds 120m.

Pearson's share of the retuning costs could be about pounds 45m, reflecting its 24 per cent interest in the new terrestrial service. The figure will be included in an eagerly awaited trading statement from the media, leisure and financial services conglomerate, which is expected to concentrate on news from the US and UK book publishing businesses.

Pearson is expected to say that its US Penguin subsidiary has largely avoided the troubling trend in the United States toward a high level of returns from retailers, because of its "just-in-time" printing arrangements.

Analysts did not expect any further news on Mindscape, the ill-starred CD-Rom and game cartridge manufacturer, which is expected to make losses of up to pounds 46m this year. The problems at Mindscape were first revealed in a trading statement a year ago.

Analysts' estimates for the full year vary widely, from just pounds 280m to as high as pounds 370m, reflecting differing expectations on write-downs and other items. Pearson's sprawling assets, which include Madame Tussaud, the Financial Times, 50 per cent of the Economist, Thames Television and Addison-Wesley-Longman, the educational publishing group, have often led to confusing results, depending on how the earnings are stated by the company. The television subsidiary, grouping Thames, Grundy Worldwide, SelecTV and ACI, was expected to have performed strongly in 1996.