DAVID ELSTEIN, the former chief executive of Five, has emerged as a front-runner in the $300 million (£167 million) race to buy Hallmark International, the televison business owned by the American greetings card maker.
The broadcast executive is leading a venture capital bid that has made the final shortlist in the auction of the business, whose assets include the Hallmark Channel, a family entertainment service that has a 1.2 per cent viewing share in British digital households.
Mr Elstein’s bid is understood to be backed by 3i and Providence Equity. But he faces competition from several sources, including a rival offer led by John Lack, one of the founders of the music channel MTV.
Final bids were handed in earlier this month and a decision on the future of Hallmark International, the auction of which is being handled by UBS, the investment bank, is expected next month. A verdict could come as soon as a week from now.
Hallmark, the parent company, originally entered broadcasting in the belief that this would help it to build up its brand.
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But after several years of investment the company has concluded that there are no meaningful synergies between greeting cards and television programming.
The auction is complicated by the fact that not all the offers received by UBS are for all of Hallmark’s business. Hallmark runs channels in Europe, Asia and Latin America and owns a programme library that includes a popular version of the story of Gulliver’s Travels.
BSkyB, the satellite broadcaster in which The News Corporation, parent company of The Times, has a 35.4 per cent stake, had also been touted as a bidder for the Hallmark Channel in the UK.
But sources at the satellite broadcaster indicated that no discussions were active at present.
Hallmark’s preference is to sell the International business as a whole, largely because that is the simplest and easiest way of unloading the asset. Mr Elstein’s bid is believed to encompass the whole International operation.
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The financial performance of the business, however, is patchy. According to the annual report of Crown Media, part of the Hallmark empire, Hallmark International lost $21 million on revenues of $83 million — although the UK business is understood to be one of the strongest parts of the International business.
Hallmark International, which describes its programming theme as “great stories that stay with you”, had 57 million subscribers for its channels in nearly 120 countries at the end of last year.
In Britain the Hallmark Channel is available to more than 8.6 million pay-television subscribers on both cable and satellite, its second largest market outside the United States after India.
Once the auction is completed, Hallmark will retain its US channel, which has 56 million subscribers spread across all the major pay-television platforms.
The US business is regarded as more familiar to the Kansas City-based parent company even though it, too, has no overlap with the greetings card business.
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None of those involved in the auction would comment. Mr Elstein said that he had “nothing to say on the subject” when asked yesterday about the status of his bid.