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A horror show for venture capitalists.

Byline: By Guy Anderson

A venture capital firm lost a six-figure sum when a cult TV channel went into administration, it emerged yesterday.

Northern Enterprise backed The Horror Channel with funding of pounds 200,000 when it began broadcasting in May this year. But financial difficulties caused the Gateshead-based station to go into administration four months later.

The Horror Channel ( which broadcasts cult films including Hammer Horror classics ( was later resurrected under the original management team led by founder Tony Hazel following a deal with administrators, Newcastle accountants RMT.

Creditors of the company learned at a meeting yesterday that they can expect to be paid within two to three years. However, NEL said there is "no possibility" of recovering its investment.

Simon Jackson, a senior executive with NEL who led the original deal, said: "An investment was made in The Horror Channel, which has been lost.

"While we understand that creditors will be paid, we have decided that there is no possibility of getting it [the investment] back."

Delays in receiving advertising revenues were blamed for the failure of The Horror Channel.

However, the original management team formed a second company ( Amore TV ( which secured a second round of private equity funding and took over the assets, including the brand name of the Horror Channel from administrators. The deal kept the station on air and saved 10 jobs. Ian Cull, operations director of The Horror Channel, said: "It has been a fiery phoenix that has risen again, and this time with private equity investors rather than venture capitalists."

He added: "We gave them [NEL] an opportunity not to lose out. We said we could turn this around if they put more money in and they declined. We had no option but to go into administration.

"We aim to pay back the creditors within two to three years. That, however, does not include NEL."

Chris Appleby, of Newcastle dealmakers Quantum Corporate Finance, put together the seven-figure funding package which relaunched The Horror Channel.

He said: "Revenues were delayed so we had to think of a way to resolve the situation. This was what they came up with. The original business did not work so the directors were under an obligation to do the best thing for the company. The result was a second deal to save the business and the jobs."

The Horror Channel continues to broadcast on BSkyB as a free-to-air channel running for 16 hours each day and aiming for pounds 1.5m turnover this year, Mr Cull said.

Its original airtime of 12 hours a day was extended after ratings reached 3.45 million during the first 16 days.
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Publication:The Journal (Newcastle, England)
Date:Nov 30, 2004
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