WLW Woolworths

RNS Number:6763A
Woolworths Group PLC
09 July 2004





                         FORMATION OF NEW JOINT VENTURE


Woolworths Group plc ("Woolworths Group") has today agreed terms for the
formation of a joint venture company with BBC Worldwide Ltd ("BBC Worldwide"),
the consumer commercial arm of the BBC, which will participate in video and
music publishing and TV/video production.



The new venture "2 entertain Limited" will combine the current video and music
publishing and TV/video production businesses of the Woolworths Group
subsidiary, VCI plc, with the video publishing business of BBC Worldwide.  BBC
Worldwide is to retain video publishing rights in Music, Educational and
Children's programming.   A UK sales and distribution arrangement for BBC
Children's video titles has been agreed with the new venture.



Completion of the transaction is now conditional on certain regulatory and
financing clearances.



On completion, Richard Green, who is currently Managing Director of VCI will be
appointed as Chief Executive of 2 entertain Limited.  He will report to a
supervisory board consisting of three representatives from each of the parties
to the joint venture.  The three representatives from Woolworths Group will
include Christopher Rogers and Trevor Bish-Jones (Woolworths Group Finance
Director and Chief Executive respectively) and the three representatives from
BBC Worldwide will be Rupert Gavin and David King (Chief Executive and Finance
Director of BBC Worldwide respectively) and Chris Weller (Managing Director,
Consumer Publishing BBC Worldwide).  Chris Weller will be the first Chairman of
the Supervisory Board and Executive Chairman of the management team.  The equity
split between the joint venture parties is 40% Woolworths Group, and 60% BBC
Worldwide



The combination of the existing strong licence portfolio of VCI, the current BBC
video catalogue and the opportunity to invest in worldwide video rights for new
BBC programming offers the venture a broad base of repertoire sources.  The
venture will be well placed to compete in the buoyant DVD market and will enjoy
a strong presence in the market for popular British programmes.



In the year to 31 December 2003, the contribution of VCI plc to the Woolworths
Group profit before interest, tax and exceptional items was #16.2m and its
turnover was #95.0m.  On a proforma basis in the year to 31 March 2004 the
turnover and profit of the relevant elements of the video publishing business of
BBC Worldwide were #81.6m and #23.6m respectively.  Turnover in the joint
venture vehicle is expected to be in the region of #180.0m by the close of its
first full year of trading.   The value of the net assets relating to VCI plc
being transferred into the new joint venture will be approximately #3.0m, and
the combined net assets of 2 entertain Limited post completion will be
approximately #9.0m.



Commenting on the deal Christopher Rogers, Chairman of VCI and Finance Director
of the Woolworths Group, said:



"This is a very exciting development for Woolworths.  In creating this joint
venture, we are bringing together two of the most successful players in the home
entertainment market.  2 entertain will be a more broadly based company with a
stronger portfolio of product, providing the opportunity to better capitalise on
the good growth prospects in the home entertainment market, both in the UK and
overseas."



Rupert Gavin, Chief Executive of BBC Worldwide, said:



"This is good news for the British video industry, for British talent and for
video buyers.  The strength of the major TV and film studios can make it
difficult for British production companies to ensure their video properties and
talent get enough access to markets.  By combining the scale and expertise of
two successful British distributors in a partnership, we can drive sales
opportunities more strongly and, in the process, also ensure there is greater
consumer choice. "





                                    - Ends -





Enquiries:


Woolworths Group plc


Christopher Rogers, Finance Director               0207 706 5689
Alexia Latham, Tulchan Communications              0207 353 4200

BBC Worldwide Ltd


Jennie Allen, Director Corporate Communications    0208 433 2973 or 07720 731735





Notes to Editors:


   *     VCI pioneered the creation of the retail video market in the UK and 
         has sold over 100 million videos since its launch.  Its catalogue 
         includes classic feature films, TV programmes, children's
         favourites, sports and music and caters to all age groups and tastes.  
         Best selling titles in the last year include Peter Kay's Phoenix
         Nights, Boohbah and Bo'Selecta


   *     The BBC has been releasing video titles for home entertainment via its 
         commercial subsidiary since 1981 and has a catalogue of around 400 
         titles in VHS and 200 titles in DVD format.  BBC Video's catalogue 
         includes comedy, drama and factual titles ranging from the recently 
         successful "The Office"  and "I'm Alan Partridge" to a backlist which 
         continues to see healthy sales of titles as diverse as "Blue Planet",
         "Fawlty Towers", "Blackadder" and "Pride & Prejudice".






                      This information is provided by RNS
            The company news service from the London Stock Exchange
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