PolyGram's purchase of ITC builds jigsaw

BY ROGER TRAPP PolyGram's acquisition of the International Television Corporation not only gives its fledgling film division a back catalogue that includes Thunderbirds, The Prisoner, The Saint and other classics produced by the company founded by Lord Grade; it also r epresents a vital piece in the jigsaw that the global entertainment group is assembling.

The international company has made no secret of its intention of making the PolyGram Filmed Entertainment division, launched only three years ago, into a significant player in the visual field - to match its success in music.

Michael Kuhn, president of the division, said yesterday:"This acquisition represents a further implementation of our strategy for building a fully integrated studio; it gives us a substantial catalogue and, in effect, a new division - PolyGram TV Distribution."

He added that the move would enable the national film operations to develop in a balanced manner.

In recent years, PolyGram - in which the Dutch electronics company Philips owns a substantial stake - has built up its presence in the music business by acquiring such well-known record labels as A&M, Island and Motown - and running them like independents.

It is seeking to repeat that success in film. UK-based Working Title has enjoyed huge success with Four Weddings and a Funeral, while the three Hollywood-based production companies, Interscope Communications, propaganda Films and Island Pictures, have been responsible for the likes of The Hand That Rocks The Cradle, Wild At Heart and Kiss of the Spider Woman. It also played a significant role in financing the latest British hit, Shallow Grave.

Mark Beilby, media analyst at SG Warburg, said the strategy made a lot of sense. There was no point in trying to ape the Hollywood studios, he said. In the music field it had used its artists and repertoire experience to create niches. It should do the same in film, he said.

Moreover, by obtaining such a strong back catalogue and gaining a susbtantial presence in the television distribution market, it was acquiring the mass needed to compete on an international basis. Because much of the 10,000 hours of film were taken up byseries in demand by the growing number of television channels around the world, the deal stands to make a substantial contribution to PolyGram's earnings. Mr Beilby rates the $156m that PolyGram is paying for ITC a fair price.

Founded in 1954, ITC enjoyed early success with such series as The Adventures of Robin Hood, before making the 1960s hits The Saint and The Prisoner. It later moved into Hollywood and made a range of features, including Return of the Pink Panther and Sophie's Choice.

The company was sold to PolyGram by Montagu Private Equity, a subsidiary of Hongkong and Shanghai Banking Corporation through Midland Bank.