Once upon a time, the media world was straightforward. ITV versus the BBC, the Sun versus the Mirror, TV versus newspapers, cable versus satellite, Murdoch versus everybody.
Not any more. All but the sharpest hatchets are being buried and the most ancient enmities forgotten, as everyone scrambles to get into bed with everyone else. No one wants to be left without a partner in the new global multimedia age.
No sooner has Lord Hollick’s MAI merged with Lord Stevens’ United News, than the Express is discussing sharing its ad department with the Telegraph, like the ITV sales houses. Through Channel 5, Lord Hollick is also in bed with Pearson and CLT, the European conglomerate, which has a growing stake in the UK radio business, itself already carved up into a series of interlocking alliances between EMAP, GWR, Capital and Associated Newspapers.
Meanwhile, Pearson has a global strategic alliance with the BBC, which now commissions programmes from Granada to help its schedulers compete with ITV and BSkyB. But Granada itself is a shareholder in BSkyB, while both the BBC and ITV share top sports events with Sky. And an Express/Telegraph sales deal might be scuppered by Mirror Group, part-owners of The Independent, which has discussed various alliances with the Express and which owns 20 per cent of Scottish Television, which is linked to HTV, which…
This cat’s cradle of alliances and rivalries will reach new heights in the digital age, with BSkyB talking to all-comers about joining forces for its digital satellite venture and the BBC announcing it could go digital via satellite before the launch of Digital Terrestrial TV.
Yet these alliances are simple when compared with those of the American company which has taken the cat’s cradle as its logo and turned complex ownership structures into an art form. TCI – Tele-Communications Inc, based in Denver – comes in so many guises and with so many partners it makes the head spin.
Perhaps best known as America’s biggest cable TV company, TCI also has large interests in satellite TV through the direct-broadcast Primestar operation. And in programming, through Liberty Media, which has stakes in 91 TV channels, including CNN, The Cartoon Network, Discovery, the Family Channel, Court TV, QVC and The Box. It is estimated that, added together, the group is worth over $30bn.
When the merger between Time Warner and Turner Broadcasting Systems goes through, TCI will be the biggest shareholder. And two of the TCI divisions – Liberty and TCI International – have just signed a deal with Rupert Murdoch’s News Corporation to form a global alliance to run TV sports channels (excluding the UK, where, to TCI’s frustration, BSkyB is all-powerful). It is expected to trade under the name Fox Sport.
Internationally TCI is also spreading its wings with ventures in 18 countries so far. In the UK, TCI controls the largest cable TV and telephone company, TeleWest (which also owns the United Artists cable systems), and Flextech which, through United Artists Programming, has stakes in cable and satellite stations such as UK Gold, UK Living, Bravo, Playboy TV and Discovery, as well as 20 per cent of Scottish Television.
The ludicrous complexity of the TCI/ TeleWest/Flextech company structures, with their cross-holdings and minority stakes, used to irritate me – why didn’t they tidy it all up? It wasn’t until I met TCI’s president and chief executive John Malone that I realised it was quite deliberate.
There are two reasons. The first is regulation. “Why is our structure so convoluted?” says Malone. “I blame the Government. We’re not allowed to own broadcast licences in markets where we have cable interests, there are restrictions on the number of channels we can own, and there’s a whole series of regulatory agencies defining ownership in different ways. So we contort ourselves to fit the rules.”
The second is prudence. TCI is hedging its bets about the converging world of television, telecommunications and computers. “I’m very conservative,” says Malone. “If I’m at the race track and three horses have a chance, I want to bet on all three. Right now, I’d hate to say which will win – content or delivery – so I want to be in both.
“I don’t believe any organisation – except perhaps Bill Gates’ Microsoft – has the power to do it all,” he says. But he also perceives that the pace of change is so fast, Gates may not remain supreme for ever. Just as Microsoft came from nowhere to topple IBM, TCI believes it can be challenged in its turn.
“Microsoft had a stranglehold on PCs, which are effectively private networks of computers,” says Brendan Couston, president of TCI Communications, who is widely seen as Malone’s heir apparent. “But everything changes once you get into public networks, as we are now. If you can truly penetrate the US with a smart terminal and a smart network, you can challenge Microsoft.”
TCI’s complex structure has its downside. In the UK, its cable branding is weak, with too many names, leading to customer confusion. It plans to rebrand its operations later this year.
But with its fingers in so many pies, TCI is well-placed for whatever the future may hold. It does not believe that UK companies, with the exception of the Murdoch-controlled BSkyB, are anything like as well prepared. “The problem with UK companies is they don’t have any international connections,” says Adam Singer, the Briton who is president of TCI International. “It does not have to be ownership, but you do need connections.” No one could accuse TCI of not having enough connections.