Filmgroup, the parent of UK theatrical distributor Redbus Film Distribution, is expected to spark interest from several companies in the cable and telecommunications sector following the cancellation of the video-on-demand company's flotation this week.

Acquisitive UK cable company NTL is seen as a potential suitor for filmgroup but other companies may also seek to make an opportunistic purchase now that its price has fallen.

Filmgroup's decision not to float follows that of Yes TV, which ditched flotation plans last month and is now seeking finance from private investors.

Filmgroup chief executive officer Simon Franks declined to name any suitors but said in a statement: "We are continuing to develop our product and I am pleased to say that the increased profile we have attracted during this marketing process has presented a number of interesting and exciting business opportunities."

Franks cited market conditions for pulling the planned flotation on the London Stock Exchange on June 14. Filmgroup had already slashed how much it aimed to raise from the float. The company, backed by Internet guru Cliff Stanford, was to have raised about £75m, valuing the operation at about £260m.

The company's research and development activities are understood not to be affected by the cancellation since filmgroup has previously said that is has developed the technology necessary to broadcast films on the Internet at high enough quality. But the roll-out of the service looks more likely to affected by the move unless filmgroup can strike a deal in the next few months.

Filmgroup is understood to have structured at least some of its deals for VoD and theatrical rights to films on the basis of equity in the company based on the float. Intertainment, which recently struck a deal for about 75 films with filmgroup, has options for up to 20% of the operation. A deal with a US partner which involved equity in the company also faces uncertainty.

But filmgroup is understood to be able to re-work its deals to date, many of which are thought to require only an initial payment. Other options for the company include raising further investment from its current shareholders - which include Internet multi-millionaire Cliff Stanford. In a statement, filmgroup also said it may float later, following further developments.