BBCWW wins 2Entertain court ruling

BBC Worldwide, the BBC’s commercial arm, has won its court case against the administrator of collapsed UK retail chain Woolworths over the value of their 2Entertain DVD joint venture.

The case centres on a dispute about whether a licensing agreement between BBCWW and 2Entertain was terminated on Woolworths’ insolvency last November, and over BBCWW’s right to buy Woolworths’ stake in 2Entertain.

BBCWW was prepared to pay more than £100m (US$164.5m) for Woolworths’ stake just before the retailer went into administration.

BBCWW is now claiming that a licensing agreement, which allows 2Entertain to distribute and manufacture DVDs containing BBC material, lapsed when Woolworths went under. This means that the stake is worth little to anyone other than the BBC, as the parties would not be able to exploit the rights.

It also argued that it has first right to buy the shares, with the property valued on this basis. Deloitte claimed that BBCWW should have to buy the shares as if the licence had never been terminated.

The High Court ruled in favour of BBCWW on both points. It is thought that administrator Deloitte, which was acting to maximise the value of Woolworths’ stake on behalf of its creditors, will appeal against the decision

BBCWW owns 60% of 2Entertain, while Woolworths owns the balance. People familiar with the situation said the dispute might not be resolved until next year.

BBCWW said it was pleased but not surprised that the court had upheld its contractual rights to acquire the 2Entertain shares.

“Deloitte has challenged the rights which BBCWW and Woolworths agreed at the inception of the joint venture. BBCWW has successfully defended those rights in court and will continue to take all necessary steps to enforce them in the interests of our stakeholders,” it said.

As to purchasing the shares, it added: “We remain determined to get the best deal for licence fee payers by ensuring we pay only a sum that’s representative of the true market value of the outstanding 40% stake in 2Entertain. The value of these shares, which are currently owned by Woolworths and so controlled by Deloitte, has greatly diminished since initial negotiations began last November due to a number of reasons.”