Whenever I hear government officials invoking the “public interest” I am irresistibly reminded of a snatch from a John Dryden poem: “…with public zeal to cancel private crimes”.
Thus the hide, and reputation, of Sir Dick Evans – formerly chairman of arms manufacturer BAE – has been saved by Tony Blair and former attorney general Lord Goldsmith, lest the lid be blown on a massive arms scandal involving both the Saudi and UK governments. All, strictly of course, in the “public interest”.
Similarly, it seems to be “against the public interest” for BSkyB to own 17.9% of ITV – or so the Competition Commission has decreed following its tortuous investigation into an audacious share raid led by BSkyB chief James Murdoch last November.
Why exactly the public might be “interested” in a rather arcane dog-fight between major media owners is not altogether apparent. Certainly, as Murdoch has tirelessly pointed out, the share raid was not illegal: it clearly complied with the relevant legislative provisions (known as the Murdoch Clause) of the 2003 Communications Act. At the time, knowing critics fingered at least three weaknesses in Murdoch’s defences, should a competition inquiry get underway. The first was that he might be seen to influence ITV’s news provision in BSkyB’s favour. The second was that, longer term, there could be a conflict of interest in the auction for TV rights, particularly sports rights. A third was that Murdoch might in some way bias advertisers towards BSkyB at ITV’s expense.
In the event, the Competition Commission has found fault on none of these grounds. It has specifically ruled out the prospect of interference on a day-to-day basis; it has eliminated consideration of news provision and the impact on advertising revenue; and it has even admitted that the BSkyB stake does not present a risk to the “plurality” of UK media ownership.
So what exactly are we left with that defies the “public interest”? The answer is the distinctly hypothetical suggestion that BSkyB could “influence ITV’s key strategic decisions, particularly relating to investment, whether in content, capacity or new technology.” So intoxicating is this destructive drive, apparently, that it would outweigh any countervailing tendency on the part of ITV’s most powerful shareholder (ie, one James Murdoch) to build value in the company it has invested in.
Let’s take this argument a little further by exploring a parallel. A French billionaire, who happens to own a controlling stake in one of the world’s larger marketing services groups, buys just under 30% (the legal maximum, short of a takeover bid) in a major competitor, a UK-quoted media planning and buying specialist.
The Bolloré parallel
Like James Murdoch, this Frenchman (we’ll call him Vincent Bolloré) faces a hypothetical dilemma. On the one hand, he is by some margin the largest shareholder in the target company – Aegis. So, he has every reason to support that company’s growth strategy, thereby maximising his return.
On the other, he is suspected of having an ulterior strategic motive. What he really wants to do, it is said, is seize control of Aegis (without paying a market price for it) and bend its strategy to his own. Specifically, he wants Aegis to get together with his own underweight media planning and buying operation MPG and give it a bit more global gravitas. That may well be to MPG’s benefit; it is doubtful whether it is to Aegis’. Just like James Murdoch, Bolloré professes the purest of corporate motives in acquiring his stake: he too is “a long-term and supportive shareholder”.
Except that, unlike Murdoch so far, Bolloré’s actions belie his words. He has made quite a nuisance of himself; deflecting a lot of precious Aegis board time which could more profitably have been spent on improving its earnings. In short, he has given us every reason to believe – reiterating the Competition Commission criterion applied to Murdoch’s stake – that his interests as a competitor will indeed outweigh his interests as a shareholder.
Of course, Bolloré has nothing to worry about on this score at all. Although two sizeable and influential media companies are involved, they are agencies not owners, so they don’t affect “the public interest”.
It’s the content, stupid
And what is it that defines the public interest therefore? ITV’s content: the fear – no more – that BSkyB may somehow starve Michael Grade’s recovery programme (built on enriching content) of the funds necessary to succeed and thus deprive the nation of some of its favourite telly or, rather, telly-to-be.
I’m not saying such an idea never crossed James Murdoch’s mind when he acquired the ITV stake, but it looks a pretty thin pretext for blocking him now. It turns out the “public interest” is actually Michael Grade’s interest (and good luck to him; the ruling must be a weight off his mind). Also, in a token sort of way, Sir Richard Branson’s. The fearless corporate warrior has, after all, vindicated his claim that Murdoch’s action in thwarting a Virgin Media bid for ITVwas below the belt. It’s token because the likelihood of Virgin Media renewing its bid is virtually zero.
But the public’s interest? I don’t think so. Nowadays, the public is much too interested in Facebook, You Tube and user-generated content to worry excessively about yesterday’s sacred media cow. The one guaranteed result of this ruling will be a mess. It moves the goal-posts on media ownership without clearly indicating where they should be set down again. And it conveys, or rather reinforces, the unfortunate perception that “public interest” is really about settling scores within the establishment rather than acting in a fair and dispassionate way.