James Gatward’s resignation as head of British television firm TVS Entertainment ends a two-year board drama that pitted French investors against their more savvy British counterparts.

At the heart of the battle was the fate of TVS’ struggling U.S. subsid, MTM, and its impact on TVS’ chances of regaining the lucrative television franchise for the affluent southeast of England.

In exclusive interviews with VARIETY, both French board members – Etienne Mallet, president of Generate d’Images, and Pierre Lescure of Canal Plus – concede that the French board members didn’t act decisively to resolve the crisis because they were intimidated by their British counterparts.

“The British appeared so professional and well-disciplined and were speaking in their native language and that gave us an inferiority complex,” said Mallet. “I think that the major lesson this has taught me is that when you make an investment in a foreign country you must allow at least a couple of years to learn the customs and the nuances of the company. We feel well prepared now.”

The problem, sources point out, is that during that “learning period” the company’s position was critically weakened.

“There’s no question that if we lose the franchise we’ll lose a lot of money,” said Mallet. “But we establish itself as “major” ITV production company was via takeover of a large foreign firm.

With the MTM buyout, TVS could claim equal ranking with the likes of Thames, Granada – higher, in fact, because it owned a bona fide Hollywood tv producer of international hits like “Hill Street Blues.”

But Gatward (supported by the TVS board) appeared to have made every mistake in the book. According to most analysts, TVS paid too much at the wrong time (just when the syndication market was going into a tailspin with one-hour dramas especially hard hit), and failed to lock in MTM’s key creative and management forces.

In the first year after the takeover, MTM lost $8 million. TVS profits were halved (from $51 million to $25.6 million in 1990 (against estimates of $79.2 million) and its share price tumbled from a high of 374 pence to a low of 92 pence.

Media analysts doubt Gatward’s resignation will have much impact on TVS’s chances of retaining its franchise. “To a certain extent the damage has already been done. The resignation may improve prospects to a very small degree but its unlikely the (regulating) Independent Television Commission would have made MTM an issue for TVS’ ability to run a U.K. tv franchise,” said Hamish Dickson of securities firm Hoare Govett.

The irony is that had it not been for the MTM purchase, TVS would have been in a strong position to retain its commercial ITV franchise. Its U.K. tv operation continues to trade profitably and has beefed up its contribution to the network sked (with programs like “Murderers Among Us”).

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