Within the Rank organisation’s 2005 year-end report, the CEO Mike Smith admits that the deal to sell Deluxe Media Services – the DVD and CD manufacturing and distribution business – to a single preferred bidder has fallen through and that the company may sell off Deluxe Media piecemeal.

Says Smith, “We have not yet been able to sell Deluxe Media but remain committed to this course of action. We are pursuing an exit and this may take the form of either a sale of the business in its entirety or, more probably, the separate disposals of individual businesses or assets. In the short term we are taking appropriate action to mitigate the impact on the Group of continuing to operate Deluxe Media, which will be lossmaking in 2006.”

Deluxe Media made an operating loss before exceptional items of £16.4m – compared to a £9.6m profit in 2004. The Group reported a pre-tax £136.5m exceptional charge which included the revision to the expected net realisable value of the business (£80.2m), European restructuring (£27.5m) and US bad debt and restructuring costs (£28.8m).

The Rank organisation showed an overall 14% drop in profits but still made £50.7 million pretax. The organisation sold off its film processing division at the end of last year and is planning to concentrate on gaming, casinos and hotels rather than media.

However, Deluxe is still working on new developments. In co-operation with DCA, Deluxe Digital Studios’ High Definition Media Center in Burbank, California, has created their first playable HD DVD with AACS using DCA's MIS Pro HD-DVD Formatter.

Story filed 08.05.06