View from City Road: Pearson makes a good partner

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The Independent Online
Pearson has come a long way in a short time in establishing its credentials as a participant in the fashionable multi-media industry.

Last month it paid dollars 462m to acquire Software Toolworks, the Californian computer games and educational software provider. Six weeks later Pearson, owner of Thames TV's programme library and holder of a 17 per cent stake in BSkyB, has linked up with no less than the British Broadcasting Corporation to exploit directly the satellite television news and entertainment marketplace outside the UK. In quite a number of respects, this is a remarkable catch for Pearson.

A key feature is that it provides Pearson with access to a top-rated asset base of programming material without the need to pay huge sums of money, largely in the form of goodwill payments of dubious value. Most multi-media deals come infinitely more expensive and are of much more doubtful quality. For pounds 30m, or less if a third partner can be found, Pearson, with Thames TV assets already under its belt, will be participating in two new fully programmed European satellite channels.

So far so good as far as the stock market was concerned. No one got out their calculators to measure the impact of the investment on Pearson's earning per share. The boost to sentiment was quite evident in a 28p jump in the Pearson share price to 650p. Analysts were as impressed by the extra status Pearson will enjoy from its partnership with the BBC as the financial thinking behind the link-up.

The BBC, for its part, needs a commercial partner because it is not allowed to use its licence fee to fund international expansion. After an uncomfortable encounter with Rupert Murdoch's Star Television, Pearson seems just the right partner to spearhead a British drive into the global multi-media marketplace.

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