UK Gold TV 'worth pounds 200m'

Negotiators at Pearson Television and Flextech have agreed on a valuation of about pounds 200m for UK Gold and UK Living, as part of talks to consolidate Flextech's control of the leading pay-TV channels.

The figure will impress the BBC, which owns 20 per cent of UK Gold, the archive hits channel featuring BBC and Thames Television programmes, and which can sell half its holding if it chooses, for an immediate profit of at least pounds 10m.

The valuation could also serve as a benchmark in negotiations between the BBC and two pay-TV companies, Flextech and BSkyB, which are vying for the right to jointly develop six subscription channels featuring BBC programming. These are planned to be launched later this year, and would form the core of the BBC's commitment to digital TV from 1997.

But Pearson, which owns 15 per cent in both Gold and Living, is still holding out for contracts to provide transmission services and TV programmes to a range of Flextech channels in return for selling its stakes.

Pearson already generates revenues of pounds 100m a year providing transmission services - generating the broadcast signal and delivering it to the transmitter - for a range of channels, including UK Living, and has also won a contract to provide similar services for the new Channel 5, in which it has a 24 per cent stake. The UK Gold contract is currently held by Molinaire, a specialist broadcast services company.

The programme output deal is believed to be even more important to Pearson, as it scrambles to develop wider distribution for its array of television production, including programmes made by Thames Television, Grundy Worldwide, SelecTV and ACI.

The pounds 200m valuation for Gold and Living would give Pearson about pounds 28m for its stakes. Pearson is believed to be eager to see a deal completed with Flextech, particularly if the latter reaches a joint venture agreement with the BBC to launch the new subscription channels.

Both Pearson and the US Cox Communications group - which is also negotiating to sell its stakes in Gold and Living - are understood to be supporting Flextech's efforts to create a viable "second force" in UK pay television, to compete against BSkyB, the dominant player.