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Friday, 7 April, 2000, 11:01 GMT 12:01 UK
Pearson to create TV giant

Ms Scardino says Pearson TV will now create more value
Media firm Pearson is to merge its television unit with Europe's largest commercial broadcaster, creating a television giant.

Pearson TV, owner of Baywatch and the Price is Right, is to merge with the television activities of German media giant Bertelsmann, CLT-Ufa, the pan-European broadcaster.

The deal will bring together the largest commercial broadcaster in Europe with one of the biggest international content providers.

Marjorie Scardino, chief executive of Pearson, said: "This deal puts Pearson Television at the heart of one of Europe's most extensive - and most popular - broadcasting networks."

Annual revenues at the new group total 2.4bn and the new group is expected to be worth at least $19bn.

On/off talks

The two groups have held talks before, a report in the Wall Street Journal said, but the need to merge has been accentuated by recent media mergers in the US, such as the Time Warner/AOL merger.
channel 5
The new company will control Channel 5

CLT-Ufa is a Luxembourg-based company owned by Bertelsmann and Belgian holding company Audiofina.

As a result of the deal, Bertelsmann along with the German publishing company WAZ will have a 37% stake in Audiofina, with Pearson holding 22%. Around 11% will be publicly held.

The merger puts the new company in control of Channel 5 in the UK, by combining the Pearson and CLT-Ufa stakes. It will hold a 64.5% share of the channel.

CLT-Ufa's broadcasting interests include RTL, the leading German commmercial channel, RTL-branded channels in Belgium, Hungary and Poland.

Market welcome

The news was welcomed by the market and shares in Pearson jumped on news of the deal. At 1000 GMT, shares were up 1.51 at 22.05

"We are going to create the kind of value we just could not create alone," Marjorie Scardino, chief executive of Pearson said.

Bertelsmann said the deal was a milestone for the German media company, which is privately owned by the Bertelsmann Foundation and the Mohn family.

"This will be Europe's leading broadcast and content company and is Bertelmann's first move to float part of its core business," a Bertelsmann spokesman said.

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See also:

31 Mar 00 | Business
Pearson buys Dorling Kindersley
06 Mar 00 | Business
Pearson forges AOL link
17 Mar 00 | Business
Bertelsmann sells AOL stake
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