Will Dyke take a hike

No, sez Pearson's Scardino, reporting solid profit

LONDON — Marjorie Scardino, chief exec of Pearson, has flatly denied reports of a serious rift between herself and Greg Dyke, the chief exec of Pearson TV.

Speaking at a press conference to unveil a buoyant set of half-year results for the British media group, Scardino rejected rumors that Dyke is on the verge of quitting the company.

“Greg Dyke and I are not having open warfare,” she said. “These stories first surfaced two months before I arrived, and they keep coming up, but it’s just not true.”

Scardino, who joined the company in January, insisted that Pearson is committed to expanding its international TV business, which is built around the production companies Grundy Worldwide, Thames and ACI under Dyke’s leadership.

“We are looking at some very exciting prospects of how we can give it scale,” Scardino said. “Television is probably the fastest-growing of all the markets that Pearson does business in.”

Pearson TV sources said that the company is currently considering at least five major acquisitions or investments as far afield as North and South America, Europe and the Far East, any of which could come to fruition in the next few months.

The company was recently part of a consortium that won the license to run a commercial TV network in Hungary, a deal which includes substantial production guarantees for Pearson TV.

Overall, Pearson’s financial results for the six months to the end of June were considerably better than analysts predicted, with operating profit up 33% to £65.5 million ($107 million). Sales were up 10% on continuing operations to $1.56 billion.

The improvement was credited to a surge in profits at the Financial Times newspaper, and strong results at Penguin Books under the leadership of former Hollywood Pictures chief Michael Lynton.

Lynton has now been handed the responsibility to coordinate the worldwide exploitation of Pearson’s intellectual property rights. His first major deal is an investment in author Tom Clancy’s multimedia company Red Storm Entertainment, which is developing online games linked to Clancy’s books (Daily Variety, Aug. 4). The deal also gives Pearson the option on TV rights to Red Storm’s concepts, opening up the possibility of developing a new Clancy franchise for TV.

Excedding expectations

Clancy’s longtime U.S. publisher is Putnam Berkley, which was bought by Penguin last December and is already exceeding expectations. Mindscape, Pearson’s troubled CD-ROM company, will handle retail distribution of Red Storm product.

Mindscape’s results showed some improvement in the first six months of the year, with losses cut to $24.6 million compared with $63.6 million in the same period of 1996.

Pearson’s three core businesses are defined as information (built around the Financial Times), education (built around publisher Addison Wesley Longman) and entertainment. The entertainment division includes Pearson TV, whose operating profits dipped 12% to $30 million thanks to startup losses from the U.K.’s Channel 5, in which Pearson holds a 24% stake.

Pearson’s share of Channel 5’s first-half losses was $19.1 million. That means that C5, which went on air at the end of March, lost a total of $80 million in the first six months of the year. Pearson execs described the web as “on track,” having reached a 3% share of British viewing in July.

Pearson said that C5 is expected to cost its shareholders $489 million before it breaks even. Pearson’s share of that will be around $120 million, but that’s partially offset by the fact that the company is also contracted to produce more $40 million worth of C5 programming annually, as well as leasing its studios and transmission facilities to the web.

“We get to break even long before Channel 5 gets to break even,” commented Pearson’s finance director John Makinson.

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