Discovery frustrated as UKTV talks stall

Discovery Communications has accused Virgin Media of being inflexible in its stance on the sale of its 50% stake in channel operator UKTV.

Virgin Media has been seeking a sale of its UKTV stake since last year as part of a strategy of disposing of non-core assets to concentrate on its cable business. The company expects to raise around £350 million from the sale, which will be used to reduce its corporate debt.

However, a long-rumoured deal with US broadcaster Scripps Networks has stalled amid a reported disagreement over an advertising sales contract.

Discovery was also tipped to acquire the stake due to its strong relationship with BBC Worldwide, which owns the remaining 50% of UKTV. But Mark Hollinger, the chief executive of Discovery's international business, said that Virgin Media put too many obstacles in the way of a deal.

Speaking to The Guardian, Hollinger said: "As we looked at UKTV, the question was if we were going to do it could we bring Discovery UK and UKTV together.

"There were an enormous number of complications to that. Ultimately it was too complicated to pull it off. Virgin Media wanted a nice clean buyer. They didn't want anyone wanting to change the deal or the structure."

Hollinger feels that Scripps is "better suited" to acquiring the stake, because the company has a relatively limited presence in the UK and Europe beyond a few digital channels, such as The Food Network.

He said: "We were ultimately too complicated - it better suits a buyer like Scripps, with not much presence in the UK and perfectly happy to be a junior partner to the BBC."

Hollinger said that Discovery has not been involved in the UKTV talks for some time, and expressed his uncertainty over whether a deal is on the horizon.

"It is over in the sense that that we have not talked about Virgin Media and the BBC for months and months," he said. "There is nothing going on at the moment. If it doesn't happen [with Scripps], who knows."

Last November, Discovery acquired the 50% stake that it did not already own in an international TV channels joint venture with Worldwide for $156m (£97.1m).