Pearson Television is set to fulfil its ambition of becoming the world's largest international television producer after it finally confirmed its $513m (pounds 318m) bid for All American Communications, which makes the Baywatch beach drama. Cathy Newman reports
Pearson reached agreement with All American, which owns and distributes drama series and game shows such as Blind Date and The Price is Right, early yesterday morning after all-night negotiations.
Marjorie Scardino, chief executive of Pearson, said: "We have pursued All American for a while because it fits perfectly with our strategy of owning formats which are transportable around the world."
Pearson has in the past bought programmes such as Neighbours to export internationally. Greg Dyke, chief executive of Pearson TV, said the company first started talking to All American in 1995, the year Pearson TV became an international producer through its acquisition of Grundy.
He poured cold water on City analysts' worries that UK companies had come to grief in the US television market in the past, saying Pearson had to enter the US in order to be a world player. The ITV company TVS got into difficulties in 1988 when it paid $320m for MTM Entertainment, but sold out five years later for $94m.
Toni Scotti, the founder of All American who owns around $200m worth of shares, is to leave the company, along with roughly a dozen senior managers.
Derek Terrington, media analyst at Teather & Greenwood, was one of the more optimistic observers. "This is in line with the market places they've said they want to have a strong presence in." He said it now appeared that Mr Dyke, who was rumoured to have been on the point of quitting in recent months, was in for the long haul. "This must delight Greg Dyke as he's now got a big international business to run."
Another analyst said that although All American's programming was undoubtedly down-market, there was "a big market for tackiness".
Mrs Scardino said the deal had been funded in part by the sale of "passive" television interests. Pearson has raised pounds 134m this year from the sale of minority stakes in TVB, the Hong Kong broadcaster, and in Flextech. Other shareholdings, such as the stake in BSkyB, are being "looked at closely".
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