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£1B Sale of Television Business Flextech in Doubt

Posted on: Monday, 29 August 2005, 00:00 CDT

Aug. 28--Hopes are receding that the sale of television business Flextech could raise as much as £1 billion for its parent, cable company Telewest.

Flextech has been put up for sale by Telewest as part of its much-delayed £6.5 billion merger with rival NTL.

Flextech -- whose operations include UKTV, a joint venture of 11 digital channels with the BBC -- has been valued between £500 million and £1 billion. The list of potential buyers includes Viacom, Time Warner, ITV, Channel 4 and Five.

But there are now suggestions that the price for the content provider, which also broadcasts Living TV and Bravo, is likely to be lower than expectations.

There are also doubts about whether Telewest really intends to sell, with suggestions that instead, it might be more interested in getting a market valuation ahead of the merger.

However, NTL chief executive Simon Duffy has said he has doubts about the value of maintaining a content business within the merged group.

The Flextech situation is one reason for the long-winded merger talks, which are also said to have stalled over tax issues relating to Telewest changing its company domicile from Britain to America in 2004.

Telewest is believed to face a big tax charge if there is a change of control, which would be triggered by a deal with NTL. Both companies have been subject to intense restructuring after racking up huge debts. And during this time, Telewest has also moved its listing from the London Stock Exchange to the New York-based Nasdaq.

NTL, which has always been a US quoted company, has said it does not anticipate paying tax in the UK for the next ten years.

A source close to the talks said neither the tax issue nor the Flex-tech valuation were " dealbreaking issues" and was confident the merger would go ahead.

Neither NTL nor Telewest was prepared to comment.

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TLWT, TGL, VIA, TWX, ITV,

Source: Daily Mail

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