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Tuesday, 7 December, 1999, 10:30 GMT
Telewest in talks with Flextech
The Doll's House, a hit on Flextech's Bravo

The pace of consolidation in the British television industry is accelerating as cable operator Telewest announced it is in merger talks with Flextech, the pay-TV company that operates channels like Bravo, Living, and UK Gold.

The merger with the UK's second largest cable operator would create a company worth 10.5bn - bigger than the proposed merger between the two leading ITV companies, United Media and Carlton, announced last week.

The move follows the failure of Telewest to acquire the cable business of Cable & Wireless Communications (CWC), which is instead being sold to NTL, thus creating the UK's biggest cable operator.

Flextech introduced Jerry Springer to the UK
Both sides stressed that the talks were at an early stage and that there was no guarantee that they would succeed

Nevertheless, most analysts believe that there is a strong commercial logic to combining the leading cable content provider with a cable operator.

It would allow Telewest to add more interactive and digital services as it roles out digital television services, which will also allow the delivery of high-speed internet services to the home, including video on demand.

"Having lost CWC, they have really got to realise that they have to their secure position in the national market place," noted one analyst.

Close links

The two companies already have close links with each other.

Telewest has said it will carry all 13 of Flextech's channels on its new digital service which will reach 1.4m homes by the end of next year.
Dusty Bin from quiz show 3-2-1 is a UK Gold star

Flextech's channels include six joint ventures with the BBC, including UK Gold, UK Arena, and UK Living. The company introduced such US shows as Jerry Springer to the UK market, and has invested heavily in interactive television.

And there are significant cross-holdings. Telewest's largest shareholder is Microsoft, with a 29.9% stake; it also owns 7% of Flextech.

The two companies are also linked through Liberty Media, one of the largest US cable content providers, now partly owned by AT&T.

Liberty has 37% of Flextech, and 22% of Telewest.

Shares in the two companies fell back on Tuesday, having soared on Monday on rumours of a deal.

Flextech ended down 1.05 at 14.27, and Telewest dropped 6 pence to 3.45
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See also:
12 Nov 99 |  The Company File
C&W shares fall on NTL deal referral
09 Sep 99 |  The Company File
TV company revenues hit by digital
05 Aug 99 |  The Company File
Telewest high-speed Internet plan
27 Aug 99 |  The Company File
Telewest buys up Cable London

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