Pearson TV (PTV) and CLT-Ufa are to join forces, creating Europe's largest integrated production and broadcast group that now has its eye on North American broadcasting.

Friday's merger announcement is the biggest yet in the rapid consolidation of the European television and new media sectors and was accompanied by an on-going commitment to film production and distribution.

Billed as a marriage of Pearson's content and CLT's broadcast capacity, the union between these two powerhouses will result in the creation of a new company which will have annual revenues of $3.95bn (Euros4bn) and be worth a proforma $19bn. Its joint interests will span television and radio broadcasting, film and TV libraries, TV production, sports rights management, local film distribution and online services.

Thomas Middelhoff, chief executive of Bertelsmann, the group which emerges with the largest stake in the new operation, said: "in the last few weeks we have clearly strengthened our positions in the area of content and significantly boosted the e-commerce business. We are now catapulting our television business into a new dimension, enabling the new group to develop new content and genres for combined television and Internet operations."

According to Marjorie Scardino, Pearson chief executive, the new group is "uniquely well placed for growth." This was echoed by Middelhoff, who said that the group's next big move could be in North America, where it would like to buy a major broadcast position, perhaps the maximum permitted 25% in a network.

CLT-Ufa's chief executive Didier Bellens ruled out a move into pay-TV, but said that co-operation over the acquisition of film and sports rights with pan-European pay-TV operator Canal Plus is a strong possibility.

Bellens, who is the new group's chief executive designate, said that film production and distribution, launched locally in France and Belgium by CLT-Ufa, will be maintained and expanded. "Clearly this is of importance to us," he said.

The deal sees Pearson Television and CLT-Ufa folded into Audiofina, one of the holding companies that currently control CLT-Ufa. Audiofina will be renamed and shift its primary stockmarket listing to London. After the deal CLT-Ufa's two owners, Bertelsmann of Germany and GBL of Luxembourg, will have stakes of 37% and 30% respectively, while Pearson will hold 22%. The remaining shares will float on the London Stock Exchange.

The group will be headquartered in Luxembourg with content operations likely to be controlled from London. Bellens is to become its chief executive, with Ewald Walgenbach appointed its chief operating officer.

Richard Eyre, who recently left the UK's commercial broadcating network ITV in order to head up Pearson TV, will become executive director responsible for the content business and group development. He is also expected to take over as chairman of Channel 5 in the UK. The combined stakes of Pearson and CLT-Ufa in Channel 5, give them a 64.5% controlling interest.

The deal follows only weeks after the announcement that Spain's Telefonica is to take over Dutch producer Endemol and that Netherlands-based UPC is to absorb pan-European broadcaster SBS Broadcasting. Pearson is understood to have been in the running to buy Endemol, but backed out when the price got too rich for its blood. Although it continues to deny any deal, Bertelsmann is also rumoured to be seeking a deal with Seagram the owner of Universal Studios and Universal Music.

Explaining the rationale behind the deal the partners said that content from PTV will complement CLT-Ufa's 22 TV channels and allow greater innovation in developing new genres, shows and formats. With their multi-platform stance they also expected to be more room for cross-promotion.