Magazine article Marketing

Raymond Snoddy on Media: ITV Deal Is a Murdoch Masterstroke

Magazine article Marketing

Raymond Snoddy on Media: ITV Deal Is a Murdoch Masterstroke

Article excerpt

In retrospect, anyone listening carefully to James Murdoch at last week's Internet Advertising Bureau conference might have realised that something was up.

Amid the general triumphalism that interactive would be a pounds 2bn business in the UK before the year is up, the BSkyB chief executive was asked what he thought of the proposed merger between NTL and ITV.

Young Murdoch initially suggested that keeping his mouth shut was the best plan. But he then went on to question such a merger, arguing: 'I don't understand the benefit to either of them.'

He can't have thought it was that daft, because two days later, the satellite broadcaster rushed off and spent almost pounds 1bn to torpedo a merger that was so ridiculous, and fundamentally incomprehensible, that nobody could detect any advantage to either party in such a scheme going ahead.

Clearly, any notion that BSkyB might have been worried that a merged NTL-ITV could have created a business that might have posed a long-term threat as a potential rival for pay-TV sports rights is ludicrous.

However, Rupert Murdoch rarely spends pounds 1bn on buying 17.9% of a company of which he cannot own more than 20% without good reason.

So what is he up to - apart from ensuring NTL-ITV does not go ahead? One explanation, the official one put in the mouth of James Murdoch, is almost too embarrassing to repeat and leaves you wondering about the declining standards of corporate PR.

BSkyB apparently wants its investment 'to give ITV the room it needs to put the best new management in place and explore the full range of options to create value for all shareholders'.

We can safely ignore philanthropy on behalf of ITV shareholders as a reason for the purchase. In fact, the deal is a stunning masterstroke by BSkyB, and like many Rupert Murdoch deals, it gives him several potentially beneficial outcomes.

The most basic is to kill off the NTL-ITV merger. That has now been virtually guaranteed by the 135p BSkyB paid for the ITV shares.

Sir Richard Branson, the biggest shareholder in NTL, might threaten writs and complaints to the Office of Fair Trading. But as long as BSkyB has a stake of less than 20%, doesn't ask for board representation or throw its weight around, Branson would be wasting his time and money. …

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