Page last updated at 08:14 GMT, Wednesday, 21 April 2010 09:14 UK

STV to sell Pearl & Dean for 1

Pearl & Dean cinema ad
Pearl & Dean has been for sale for almost four years

The media group STV is to sell its cinema advertising business Pearl & Dean for £1.

The sale to Image Ltd, a newly formed company backed by Empire Cinemas director Thomas Anderson, is subject to shareholder approval.

STV said the deal would allow it to refocus on its core television business.

In a trading update, the company said it had seen a strong improvement in advertising.

It said this would allow it to increase its investment in high definition TV services which it hopes to have in place for the 2010 World Cup.

Pearl & Dean was put up for sale by the group nearly four years ago.

Sale price

It has been making a loss due to a contract signed in 2004 which guaranteed minimum payments to the multiplex operator Vue.

Although the sale price is just £1, STV will recoup £9.1m from the business due to a 2010 payment it had already made to Vue Cinemas.

Founded in 1953, Pearl & Dean is the second largest cinema advertising contractor in the UK, with a market share of 36.6%.

STV's chairman Richard Findlay said the sale "represents the final step in the board's plan to dispose of legacy businesses which we inherited and to refocus the group on its core media business".

While confirming trading for the company was in line with expectations, STV said that it remained cautious about the second half of 2010 "given the uncertainty caused by the general election".

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