Whittle sells flagship schools-TV business

NEW YORK - Whittle Communications, the troubled US media company partly owned by Daily Mail and General Trust, has agreed to sell its flagship schools- television business to a company controlled by the buyout specialists Kohlberg Kravis Roberts, writes Larry Black.

The deal is expected to be announced next Monday. K-III Communications will pay Whittle dollars 300m ( pounds 196m) for its Channel One network, the venture that was to have been the first stage of a plan called the Edison Project to create an alternative national education system in the US.

Over the past decade, Whittle's unusual media outlets attracted powerful backers to the company, including DMGT, which once had a majority stake but has since reduced its share to 22.3 per cent, and Time Warner and Philips Electronics, which paid dollars 185m and dollars 175m respectively for 33.4 per cent apiece.

The network, which broadcasts advertising-supported programming to 12,000 US public schools, has had difficulty attracting long- term sponsors, although it remains profitable. But Whittle has faced a cash crisis and been forced to abandon most of its other operations, notably a television channel that broadcast to doctors' waiting rooms.

With its owners unwilling to inject new capital, Whittle was forced into a fire-sale of Channel One and had been negotiating the sale of a half-share to Goldman Sachs' merchant banking division.

K-III, which is run by Macmillan's former chief executive, William Reilly, is active in the schools and youth market, producing Seventeen magazine, CD-ROM and educational videos, the Funk & Wagnalls encyclopaedia and a weekly newspaper for teenagers. Many of its titles are former parts of the Macmillan group, which Mr Reilly was able to buy back cheaply when the Maxwell empire collapsed.