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BBC to buy out int’l partners

Takes sole ownership of BBC World and BBC Prime

LONDON — The British Broadcasting Corp. is poised to take over sole ownership of the international channels BBC World and BBC Prime by buying out its partners Pearson and Cox Communications.

The deal, which will be announced later this week, will effectively see Pearson and Cox write off their investment of around $40 million in European Channel Management, the company that runs the two services.

BBC Worldwide, the pubcaster’s commercial arm that already owns 45% of European Channel, is said to be paying only a nominal sum to acquire Pearson’s 45% stake and the remaining 10% from Cox.

That deal reflects the ongoing financial struggles of the 3-year-old news channel BBC World, which reaches more than 50 million homes in 180 countries via cable, satellite and terrestrial transmission, and the entertainment service BBC Prime, which is restricted to 5.6 million cable homes in Europe.

The buyout comes as the pubcaster finally is making progress with its long-cherished ambitions to launch BBC World in the U.S. market.

After more than a year of tortuous negotiations, the BBC finally has completed its global alliance with Discovery Communications, which is due to be formally unveiled Thursday. As part of the deal, Discovery and leading shareholder Tele-Communications Inc. will give BBC World its Stateside entry.

Other aspects of the alliance include extensive co-productions between the BBC and Discovery, and a commitment to launch joint-venture channels around the world.

But the exit of Pearson and Cox from ECM illustrates how difficult private companies have found it to make commercial partnerships work with the BBC, whose public-service agenda and management ethos complicates its decision-making.

Pearson in particular has long been unhappy with its role in ECM, for which it was expected to provide the bulk of the operating capital without being able to impose an aggressively commercial strategy to recoup its investment.

Pearson’s decision to sell out also fits with its wider strategy to dispose of minority broadcasting investments that do not bring any tangible benefit for its core production business. In the past year, Pearson sold its 10% stake in Hong Kong broadcaster TVB, and half of its 4% stake in U.K. satellite programmer Flextech. Its remaining stake in Flextech, and its small holding in satcaster BSkyB, both are up for sale.

Pearson remains a partner with the BBC in the Australian satellite channel UKTV.

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