BBC Worldwide (BBCWW) has paid £17m (US$25.6m) for the 40% of DVD distributor 2Entertain BBC Worldwide (BBCWW) has paid £17m (US$25.6m) for the 40% of DVD distributor 2Entertain that it didn't own, ending a sale process that began in 2008 with the collapse of the other JV partner, high street retailer Woolworths.
BBCWW today stressed that the funds for the purchase didn't come from the licence fee, and said the figure "represents the fair value of the stake as agreed between BBC Worldwide and the administrators of Woolworths."
The deal ostensibly values 2Entertain at £42.5m. However, a BBCWW rep told C21 that this valuation doesn't take into account the value of the IP rights that 2Entertain holds and exploits, the ownership of which reverted back to BBCWW when Woolworths folded.
Furthermore, BBCWW said the £17m pricetag is based on the fact that Woolworths' distribution arm EUK went into administration owing 2Entertain "a significant amount of money" and also the latter firm "was forced to absorb a significant share of a pension liability in respect of certain 2Entertain staff."
Consequently, the BBCWW rep said, the real value of 2Entertain isn't reflected by the £17m figure in today's deal and BBCWW offered £100m for the 40% stake in 2008. As it stands, 2Entertain sold 14.6 million DVDs in 2009 and contributed £28.6m to BBCWW profits in 2008/09, with sales of £176.4m in this period. Bestselling titles include Planet Earth, which has sold almost seven million units worldwide.
John Smith, CEO of BBCWW, said the deal was good news for stakeholders. "2Entertain's retail partners know it is now backed by a stable owner; consumers can continue to enjoy BBC content on DVD in their own homes; the independent production sector already works closely with 2Entertain; and licence fee payers will continue to benefit from 2Entertain's contribution to BBC Worldwide."
Paul Dempsey, CEO of 2Entertain and MD of BBC Worldwide Home Entertainment, added: "The 2Entertain business has not been distracted by the events of the past 18 months, continuing to deliver impressive results. Under full BBC Worldwide ownership, it now looks forward to a more settled period."