"Neighbours sale beats the clock"
In 1995 my 'Windfall' royalties contract with Grundy International was taken over by Greg Dyke - when he took over the company itself on behalf of Pearson plc --. So - as he was THEN a main board director of Pearson plc and CEO of Grundy International plc itself - I wrote to him when BBC Entertainment (allegedly!) stole our jointly owned format under our joint still extant contract..!... He did not reply.---
Here is the amusing FULL GRUNDY TAKEOVER BACKGROUND. Story ©30th March 1995
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Pearson's battle to buy Grundy Worldwide, the independent
television production company famous for programmes such as Neighbours
and Sale of the Century, last week turned into a game show
race against the clock in its own right.
The clock was already ticking when Mr Greg Dyke, the new chairman and chief executive of Pearson Television, flew on Concorde last Wednesday to New York and in the airport lounge met Mr Reg Grundy, who runs Grundy Worldwide from his Bermuda home.
Mr Grundy, the 71-year-old former boxing radio commentator
and quiz show host who founded Grundy Worldwide, and Mr Dyke,
who began his career on local newspapers, hit it off straight
away and more talks were scheduled for Friday in London.
By then, time was beginning to run out. Had the deal not been agreed on Friday, Mr Grundy would have resumed his journey to Australia where he was due to meet analysts yesterday, and the planned flotation of 35 per cent of his company would have proceeded.
Mr Dyke had already been talking to Grundy about programmes for the planned Channel 5 bid - "high volume, low cost, high ratings" - when he realised there would be a good fit with Thames Television, another Pearson subsidiary.
Grundy said it would proceed with its international public offering while Pearson promised it would continue with its detailed look at the company. Unusually, because of the planned flotation, extensive details were available on the private, and until then rather secretive company. According to the prospectus revenues in 1993-94 fell to $79.6m (£48.5m), compared with $97.8m in the previous 12 months - a drop that was blamed on factors such as Germany's Tele 5 switching to sports programming. Operating profit dipped from $18.3m to $14.9m, although the 1994-95 results are believed to show a considerable recovery.
The flotation, being organised by Merrill Lynch, envisaged the shares of Grundy Worldwide being offered at between $18 and $20, raising some $100m for Mr Grundy and valuing the company at between $272m and $302m.
In Australia there has been local comment about the relatively high historic multiple on which the shares were being offered, given the limited resale value of game show programming. The flotation meant, however, that Pearson had the chance of buying within the flotation range or letting the deal go.
The other complexity, apart from price, was what are tactfully being described as "the tax complexities".
The bulk of the company's profits - $12.7m out of $14.8m made in 1993-94 - goes through subsidiaries in Bermuda and Antigua where no tax is paid. The Antiguan subsidiary owns the worldwide rights to programme formats and concepts.
"The deal will be earnings enhancing from year one," said Mr Dyke, adding that further profits would flow from using Thames' studios to make Grundy programmes.
Mr Grundy, who is married to Neighhours' actress Ms Joy Chalmers-Grundy, began moving out from Australia about a decade ago with what the group has dubbed "parochial internationalism" - adapting game show formats into local language products and selling them into European, Australasian and US markets.
Grundy once described the process as "taking the kangaroos and kookaburras out". The company once took the old US game show, 'The Sale of the Century', updated it and sold it back to NBC, the US network.
Production accounted for some 75 per cent of 1994's $80m revenues, and distribution the remainder. The programming is currently produced, or co-produced in Australia, New Zealand, the UK, France, Germany, the Netherlands, Sweden, Spain, Italy and Chile.
The biggest single source of revenues was France, providing almost 30 per cent of the group total. The UK produced another 28.1 per cent, and Australia, about one fifth.
But Grundy's declared aim is to target new markets in South Africa, eastern Europe, Latin America and Asia. For example, it has been talking about producing a sports game show for Mr Rupert Murdoch's Star TV aimed at the Indian market to be called Kricket.
Meanwhile, Neighbours, while accounting for only a quarter of net revenues, brought in about 36 per cent of gross profits last year.
The soap is produced under a contract with Australia's Ten Network, which has been extended to October 1996. The main distribution contact is with the BBC in the UK, and runs through to 1998.
Mr Grundy will now be spending more time on his private Bermuda beach, but will remain a consultant to the company he created.
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