European media group TV-Loonland (TVL) is to acquire a majority stake in UK DVD and video distributor in a bid to boost the fortunes of its nascent home entertainment business.

In a complex deal Metrodome will acquire TVL subsidiary rights-holding company Loonland Home Entertainment Ventures Ltd for£1.25m which will be paid with 7.36 million Metrodome shares. At the same time TV-Loonland will increase its holding in Metrodome from the 29.95% it acquired last year, to a controlling 54.1% stake.

The deal, which is expected to be approved at an extra-ordinary shareholders meeting next month, gives Metrodome the rights to a substantial back catalogue of children's programming -including Pong Wiffy, Little Ghosts and The Cramps - as well as an option over future TV-Loonland productions.

Metrodome, which reported widening group losses of£3.28m (up from£824,000 last year) on Monday (Aug 12) said the deal will enable it to take advantage of a growing retail market in childrens' and family orientated programming.

Since the Spring Metrodome has been undergoing an extensive re-structuring programme that has seen the disposal of both its direct marketing arm Metro Direct and DTK Metrodome, the company's music distribution business.

Metrodome chairman Bruce Fireman said the deal would help the company return to profitability. ' We believe that we have now drawn a line under the unhappy past and by concentrating on our core skill, that of film distribution for theatrical and home entertainment, to which we propose adding'the complimentary business of children's home entertainment programming, we will recreate a stable platform to increase the size of the business and return it to profitability."

TVL's head of home entertainment D Markus Schafer said the deal would result in the 'probable' relocation of Metrodome into TVL's London base.