European Media Makes Headlines

European media groups are involved in significant ownership changes now taking place in global media systems. Their main new investments and sales involve TV, publishing and music.

The BBC and American media group Discovery have agreed to create a range of global television channels, including the BBC's own US network. The deal will combine Discovery's financial strength and marketing skills with the BBC's production expertise and unmatched television archives.

The US company - best-known for its pay-TV Discovery Channel - will invest more than US$565 million in the alliance over the next decade, while the BBC will provide its film library and programme-making experience through its commercial division, BBC Worldwide.

BBC and Discovery aim to become the world's leading force in factual networks, operating in every corner of the globe, according to BBC DirectorGeneral John Birt. For the BBC, the deal is its most ambitious step towards exploiting the American potential of its programming and creating a dedicated distribution outlet for its shows in the US.

For Discovery the alliance offers a supply of high quality programming as it expands its science, nature and history channels globally. The partnership will cover the co-production of BBC factual programmes, the creation of global TV channels, and the launch of BBC America. Discovery plans to invest about US$100 million over four years in BBC America, which will broadcast British TV hits and dramas as well as BBC news.

Few US viewers are yet able to tune to BBC America because initially it is transmitted via digital cable instead of widely available analogue. Nevertheless, Discovery expects BBC America to be available to 20-25 million US households by 2000.

In publishing, the first Transatlantic raid of the year was made by Bertelsmann of Germany which recently bought Random House of New York, making Bertelsmann the world's largest English-language book publisher.

The group formed by the sale will combine the worldwide operations of Random House and its sister companies, including Knopf and Crown Publishers, with Bertelsmann's Bantam Doubleday Dell Publishing Group.

Bertelsmann, which is privately owned, did not disclose the price it paid. Financial analysts estimate the price offered was US$1.3 billion, or slightly more than Random House's current annual sales, estimated to be US$1.1 billion.

Dutch-owned PolyGram, the world's largest recorded music company and an investor in films, became the centre of the entertainment industry's biggest bidding contest in 1998. It is for sale for about US$10 billion.

PolyGram is 75 percent owned by Philips Electronics and its assets include a film library worth about US$1 billion. PolyGram is the biggest music company in the world in terms of market share with a stable of artists that includes Elton John and such well-known labels such as Motown and Mercury.

The Dutch company reported 1998 first-quarter profit fell 88 percent to A$12 million because of a shortage of new hits.

EMI, the British music company which has such groups as Spice Girls and Rolling Stones, is also for sale. The first bidder was Seagram, the Montreal-based company which sells whiskey and films (Universal Studios).

The London-based Pearson group, whose interests include The Financial Times, The Economist and Penguin Books, made the largest British media move into the US when it paid US$3.6 billion for the education division of the New York publisher Simon & Schuster. It was the first major expansion decision by Pearson's chief executive Marjorie Scardino since she took the post in 1996. Ms Scardino, 51, is an American lawyer-journalist who first impressed the Pearson board by doubling the circulation and advertising revenue of The Economist in the United States.

The Paris-based Vivendi group, a diversified company based on water supply systems, took over Havas Media in a A$7 billion transaction. This will transform Vivendi, known until recently as CGE, into Europe's third-biggest media company, with full control of Europe's biggest pay-TV operator, Canal Plus.

Jean-Marie Messier Vivendi's 41-yearold chief executive, is convinced the company's future is in the communications business. Since Messier took over the 144-year-old CGE in 1996 he has not only changed its name but has moved it faster into media and telecoms, using the cash flow from its traditional water and environmental services businesses. Last year the company had global revenues of US$27 billion.

Havas with a 1997 turnover of US$8 billion is Europe's third-largest media group, after Bertelsmann of Germany and the Anglo-Dutch group Reed Elsevier.

Havas was founded in 1835 as a news agency which relied on carrier pigeons. Vivendi intends to exploit the convergence between TV and telecoms by using Havas titles which include Gault Millau food guides, Larousse dictionaries and the news magazine L'Express, as content for new information and entertainment services.

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