Magazine article Marketing

Raymond Snoddy on Media: Flextech Is an Unlikely Quarry in the Cable Chase

Magazine article Marketing

Raymond Snoddy on Media: Flextech Is an Unlikely Quarry in the Cable Chase

Article excerpt

Flextech, the Telewest-owned multichannel content company, has always been a bit of a Cinderella in the TV world. It was, after all, the creation of an eccentric accountant, the late Roger Luard, who sold his oil services company, gave some of the proceeds back to shareholders and used the rest to invest in the coming world of media choice. It was a wise decision, even if he didn't see its full impact.

Now Flextech, which created something of real value out of a clutch of ill-favoured basic-tier cable TV channels, finds itself in the middle of the expected merger of the UK's two remaining cable companies, NTL and Telewest.

Telewest could plausibly continue to hold onto its TV channels business - after all, BSkyB owns and operates channels as well as running its main satellite platform business - but it would not be a great idea.

The UK's cable operators have never really shown any feel for launching and operating their own channels, and if the final stage in the consolidation of the cable industry goes ahead, they will have plenty on their hands without worrying about Flextech.

Flextech is set to become a hot property, with the possibility of a real contest breaking out between organisations keen to buy a solid multichannel presence with a single flourish of the cheque book. The key is that it is a collection of assets that adds up to considerably more than the sum of its parts.

It would still be difficult and expensive to start from scratch and replicate Flextech's package of owned or operated channels, which include Bravo, Living and Challenge.

That brings us to Gerhard Zeiler, chief executive of the RTL Group. As he looks at RTL's businesses across Europe, including a controlling stake in Five in the UK, Zeiler has a clear vision of what a terrestrial broadcaster needs to do in the digital age.

A standalone terrestrial TV channel will make less and less sense. In the UK that gives Zeiler three main options: RTL can merge with a broadcaster that already has digital channels - Zeiler tried that last year, unsuccessfully, with Channel 4; RTL can start launching its own digital channels in the UK - but as ITV forges ahead with its own multichannel development there has been no sign of a response from Five; so if Zeiler is serious about his strategic thinking, RTL must be a serious bidder for Flextech. …

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