BBC Worldwide beats 2entertain appeal

Thursday, November 12 2009,

BBC Worldwide has secured victory over the administrator of collapsed retail chain Woolworths in a legal dispute over DVD publishing operation 2entertain.

Back in August, the High Court in London ruled in favour of Worldwide in the disagreement with Deloitte, which is currently winding down the UK assets of Woolworths, but the administrator immediately tried to overturn the decision.

At the heart of the case was a dispute over the validity of a licensing agreement owned by the DVD publishing business. As the 60% majority owner of 2entertain, BBC Worldwide wanted to purchase Woolworths's remaining 40% stake in the business and was prepared to pay around 110m to secure it before the retailer collapsed last year.

However, bosses at Worldwide subsequently argued that the licensing agreement which allowed 2entertain to publish DVDs containing BBC programming expired when Woolworths went into administration. This would, therefore, make the retailer's 40% stake in 2entertain virtually worthless to anyone but Worldwide.

In a hearing last week, the appeal judge upheld the verdict reached in August, meaning that Worldwide now has first option to buy up the remaining 2entertain shares at an appropriate value.

In response, a spokesman for the BBC's commercial arm described the ruling as a "comprehensive and unequivocal validation" of its case.

"This latest judgment fully upholds the position we have maintained from the outset, and we now look forward to being able to move ahead with taking full ownership of 2entertain," he told Broadcast.

"Our focus has always been on getting the best deal for licence fee payers by ensuring we assess and pay the correct amount for the 2entertain stake, taking into account the deal we did with Woolworths and a landscape which has changed considerably."