Only last week at the Engage conference, James Murdoch, chief executive of BSkyB, spoke passionately of the dangers of "soggy no-man’s land" in television and expressed the view that, in an age of multiplying niches, mass audiences start to matter a lot more too.
Little did we appreciate just how much those mass audiences mattered to him until we learned, a mere three days later, that Murdoch had spent close to a billion pounds of his shareholders’ money on acquiring 17.9% of ITV.
The question for advertisers and agencies alike is this: will Murdoch be a benign or malignant factor in their dealings with ITV?Opinions about the motivation, and wisdom, behind the Friday evening "dusk raid" differ widely, but there was certainly nothing soggy or middle ground about it.
In one fell, strategic swoop, BSkyB has made itself the steward of ITV’s future. Like Cerberus, the three-headed hell-hound, it can deny access to the Elysian Fields for any would-be conquering heroes. It has scuppered Branson’s bid before it got started and any direct approach from RTL, owner of Five, now looks a lot less likely. Private equity interlopers, meanwhile, will find the going unattractively expensive.
In a sense, what the astuter pundits of two or three years ago were predicting has happened. ITV is, to all intents and purposes, passing into the hands of a US media company, though they little imagined it would be Rupert Murdoch’s, or that a minority stake (effectively sparing the expense of a full takeover bid) would do the trick.
Outrageous? Uncompetitive? Someone (the regulators, for example) will have to do something about it? Not really. James Murdoch has acted entirely legally in limiting his stake to under 20% and publicly distancing himself from any thought (heaven forfend!) of taking formal control. Proving that BSkyB as a minority shareholder is exercising "material influence" over commercial decisions at ITV will be extremely difficult unless Murdoch does something peculiarly stupid in the coming months.
From an advertiser point of view, there are certain reasons for welcoming the move. In the shorter term, the BSkyB stake assures stability in what was a fast-disintegrating situation. ITV will now, for example, be able to attract a chief executive of higher calibre than looked the case a couple of weeks ago. Further down the line, BSkyB is at the forefront of certain developments that should be of great interest to advertisers. Where ITV currently is trailing the BBC and Channel 4 a poor third in developing video-on-demand services, Murdoch is pioneering Smart TV – a sophisticated and ambitious attempt to tailor ads to household profiles. BSkyB’s database management and customer service skills are widely admired, unlike ITV’s.
Nonetheless, there are concerns that advertisers will need to address in any durable relationship. What sort of say might Murdoch want, as principal shareholder, in the appointment of the ITV ceo? What if there was ever any hint of Sky leveraging sales across the two organisations? What are Murdoch’s views on CRR? And who is going to guarantee a level-playing field when it comes to auctioning the big television rights?