Pearson to refocus on media industry: Conglomerate plans to demerge Royal Doulton and sell Camco International

PEARSON, the merchant banking to leisure conglomerate, yesterday announced plans to refocus itself on the media industry. As part of the strategy, it will demerge the Royal Doulton fine china business and sell Camco International, its US oil services offshoot.

Pearson, which is holding on to its interests in leisure and the Lazard investment banking group, is understood to have hoped to underline its media commitment by announcing an agreement to buy control of StarTV, the Hong Kong-based satellite television system. However it was pipped by Rupert Murdoch's News Corporation, which announced a deal on Monday.

Lord Blakenham, chairman, confirmed that Pearson had been negotiating until recently to acquire 63.6 per cent of StarTV. It reportedly offered to pay considerably more than News Corp for the business.

Pearson's shares jumped 27p to 467p as investors anticipated benefits from the demerger. News Corp, which alarmed Pearson in 1987 by revealing that it owned almost 15 per cent of the company, took the opportunity to sell more than 16 million shares at 468p to Goldman Sachs, the US securities house, which placed them later in the day. It still holds 4 per cent of the company.

Pearson's existing media businesses include the Financial Times, the Penguin and Longman book groups and television interests in BSkyB and Yorkshire-Tyne Tees. It regards family entertainment as part of the media industry and said the changes would not affect the position of Madame Tussaud's, Warwick Castle or Alton Towers, Britain's most popular paid- for tourist attraction. Lord Blakenham said the group's media businesses accounted for two-thirds of capital employed at the end of last year, against one-third 10 years ago.

The Royal Doulton demerger would take effect by the end of the year, with Pearson shareholders automatically receiving shares in the china company. The flotation of Camco would be completed by next year.

Stuart Lyons, chief executive of Royal Doulton, said the flotation was good for both companies. Doulton, which owns Royal Crown Derby, Minton and Royal Albert, made profits of pounds 10.7m before interest last year, less than half its peak but still 5.3 per cent of sales.

Lord Blakenham said the board had yet to decide on the level of borrowings in Doulton and Camco or on the size of its continuing shareholding in Camco.

James Joll, Pearson's finance director, defended the use of Lazard Brothers to advise on the demerger and disposal. 'The board decided to divest the businesses, Lazard advised on the the execution. It is quite proper.'

Pearson owns 50 per cent of Lazard Brothers and 10 per cent of the Lazard partnerships in Paris and New York.

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