Carlton eyeing Rank buy

LONDON – Carlton Communications is believed to be considering a bid for Rank Film Distributors, after both Polygram and Pearson dropped out of the running to buy the famous British company in recent weeks.

Rank Group is refusing to confirm reports that RFD up for sale, but industry sources say that Rank chief exec Andrew Teare has been quietly entertaining suitors for the past couple of months.

Rank is understood to be inviting offers for RFD at between £100 million and £150 million ($162 million and $240 million). Polygram took a look two months ago, and Pearson recently followed, but both decided the asking price was too rich.

The main value of RFD lies in its big library of classic British movies, topped up with foreign rights to some more recent American fare. It also has a U.K. distribution operation, currently run as a joint venture with Castle Rock-Turner, and an international sales arm.

The drawback, according to execs who have examined the deal, is that the library is dominated by British black-and-white movies of limited value outside English-speaking territories. Also, the library has been very heavily pre-sold for some time to come, leaving little upside for a buyer.

For example, U.S. rights are tied up with Goldwyn under a 10-year deal, and Goldwyn has an option to renew for another 10 years if it meets some fairly undemanding revenue targets.

However, Rank may still have some compensating attractions for the likes of Carlton or United News & Media, two library-hungry U.K. media groups that need British product to feed their expansion into cable and satellite TV, and both of which are starting to dip their toes into the film production business.

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