Philips pulls out of media

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EINDHOVEN -- Philips Electronics has decided to withdraw almost entirely from the media business, leaving just its 75% stake in music and entertainment group PolyGram in place.

Chairman Cor Boonstra says the media business, in which Philips has not had major success, is "unchartered water". Philips Media was set up by his predecessor Jan Timmer four years ago.

That division is now to be closed. Pay-TV station Teleselect has been sold to Canal+. Teleword, a provider of teletext services to TV stations, is for sale. And Philips has agreed with its U.S. partner United International to sell of its interest in European cable companies.

One of the main reasons is the entanglement of private interests at the top of Dutch commercial TV stations RTL4 and SBS in the Teleword subsidiary Brokerline.

Teleword is owned by Philips and the Dutch postal and telephone company KPN. In 1993, Teleword offered 50% of the shares in Brokerline to commercial TV station RTL4, in order to commit it to its services. The three directors became shareholders.

At the end of 1994, after the foundation of the Holland Media Group (between RTL4 and former public TV station Veronica) the directors wanted to sell their shares in Brokerline. Teleword and shareholders Philips and KPN $2.5m for the 50% stake. In exchange, the three directors promised to take care of new contracts for Teleword with RTL and SBS.

The lack of success is another reason for Philips to withdraw from the media business. As a shareholder, the company lost millions of dollars in the now bankrupt commercial TV station Sport7. And Philips lost $500m in the multimedia chain Superclub.

Copyright July 1997, Crain Communications Inc.

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