BROADCASTING has moved a long way since the late Lord Thomson of Fleet remarked more than 40 years ago that a stake in commercial TV is the ‘equivalent of having a licence to print money’.<\/p>\n
Granada boss Charles Allen and Carlton Communications chairman Michael Green clearly managed to convince the Competition Commission otherwise (see Page 83).<\/p>\n
They were able to put up compelling arguments. Britain’s television market has been transformed in recent times.<\/p>\n
The rise of BSkyB’s satellite offering, the cabling of Britain by Telewest and NTL and the proliferation of the BBC’s digital channels have transformed the marketplace.<\/p>\n
The ITV network has seen an erosion of audience and market share and is struggling as it sees it to compete with global giants with unlimited resources.<\/p>\n
Further, if one were to fast forward, there might even be questions as to whether terrestrial television supported by advertisinghas any future at all.<\/p>\n
The abilityto download programmes off the internet on to DVD and ‘Tivo’ style technology, which allows the consumer automatically to skip commercials, raises new questions.<\/p>\n
But before anyone takes out their hankies, consider the following. The weakness of Granada and Carlton’s shares, prior to this year’s recovery, is partly down to management.<\/p>\n
Whereas BBC and BSkyB managed to make successes out of their digital offerings, the ITV companies messed it up, made a number of unfulfilled promises and in the process gobbled up 1.2bn of shareholders’ funds.<\/p>\n
Along the way, they all but abrogated a contract with the Football League, condemning several clubs, their players and supporters to penury.<\/p>\n
Nor can it be argued that commercial television provides the excellent content which was the case when there were a dozen regional companies competing to produce programmes. With the amalgamation of production houses has come lower quality and cheaper programming.<\/p>\n
The destruction of the nation’s flagship current affairs broadcast News At Ten does not bear thinking about.<\/p>\n
Viewers increasingly have to turn to the ‘minority’ terrestrial Channel 4 to find interesting news bulletins and docu-dramas such as The Deal.<\/p>\n
So the downward spiral in ITV’s fortunes is partly its own fault.<\/p>\n
Given this torrid background, it is not surprising that Green and Allen are quaffing champagne.<\/p>\n
Plainly, the Competition Commission itself is not exactly ecstatic about its spatchcock decision.<\/p>\n
The economic fundamentals which guided it in the report on supermarkets are muddled here.<\/p>\n
The solution found of protecting existing advertising arrangements for years ahead is, in itself, anticompetitive. One member of the CC, Sarah Brown, a career civil servant, found this difficult to take and wanted to see advertising hived off in what would have been a deal-breaker for Green and Allen.<\/p>\n
All of this will be jolly cheering for Granada and Carlton shareholders who, despite past management blunders, can sit back and watch their share prices climb on the prospects of a juicy merger and future possible takeover.<\/p>\n
In effect, the Competition Commission is offering a rich cherry to an overseas buyer in the shape of 50pc of Britain’s television advertising market.<\/p>\n
There is a threat on the horizon in the form of a further inquiry into the whole structure of the TV advertising market and the size of the ‘ITV premium’ the equivalent of how retailers overcharged in the bad old days.<\/p>\n
But that is in the distance.<\/p>\n
Noone should be surprised if one of the potential American bidders which include Viacom, producer Haim Saban and even Disney should colonise the company well before any further probe into competition takes place. Heaven help the quality of the content then.<\/p>\n
Shropshire Lad<\/p>\n
THE burghers of Shropshire County Council clearly have never heard of the Chicago’s Art Institute or California’s Orange County, both of which lost their shirts by trusting in hedge funds.<\/p>\n
Phil Guy, the head of treasury and pensions, has asked Mercer Investment Consulting to advise on investing 55m or 10pc of the county’s pension assets in a fundofhedge-funds.<\/p>\n
It will have to be a good choice if it is to outperform other investments after Mercer, the fund-offunds manager and the hedge funds themselves (which charge up to 20pc-30pc in fees) have all taken a cut.<\/p>\n
Not to mention the morality of a local government taking bets on among other things, devaluations in far off lands.<\/p>\n
I fear that they have relied too much on poet AE Housman’s line: ‘Gold that I never see, Lie long, high snowdrifts in the hedge.’<\/p>\n","protected":false},"excerpt":{"rendered":"
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