Thames plans to sell US arm to management: Franchise loss leads to one-off costs of pounds 93m

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The Independent Online
THAMES Television, the company that lost the London independent broadcasting licence, is hoping to sell its US arm to management, writes Robert Cole.

News of the buyout plan came as Thames outlined pounds 93m of one-off costs incurred as a result of losing its franchise to Carlton Communications in January.

It now exists solely as a programme maker. A plan to run a fifth television channel was blocked when the Independent Television Commission left the Channel 5 franchise unawarded.

Thames spent pounds 65m on Reeves Entertainment, its US arm, in 1989. It is unlikely to recover more than a fraction of that in any sale now.

Reeves' losses rose to pounds 10.3m last year. The buyout plan arises because Thames cannot afford the injection of cash it says the business needs to get back to profitability.

The pounds 93m extraordinary charge covers staff redundancies and write-offs on property and equipment on both sides of the Atlantic. Total losses were pounds 68m, up from pounds 23m in 1991.

However, at an operating level Thames nearly doubled profitability. Reduced expenditure on programmes and pared administrative costs as the handover drew near meant it traded at a profit of pounds 64m against pounds 36m previously. Pre-tax profits were pounds 44m for the 12 months to 31 December against pounds 8m.

Redundancies caused by the franchise loss cost Thames pounds 25m in extraordinary items. Another pounds 26m was written off the value of property and machinery, and a further pounds 51m of below-the-line costs related to Reeves.

The prospect of a takeover of Thames by Pearson, the media group that owns the Financial Times, also moved a step closer yesterday. Lord Brabourne, the Thames chairman, said: 'Discussions regarding a possible offer for Thames by Pearson have advanced but agreement has not been reached.'

News about large write-offs leaked out early this month so the stock market reacted calmly yesterday. Thames shares fell 5p to 174p. Pearson was up 2p at 414p. The write-offs left Thames without reserves to pay a dividend.

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