It’s worth considering this merger’s offering

‘Offering’, rather like ‘proactive relationship’, is one of those vague, upbeat clichés carelessly strewn for effect across marketing literature. Happily, in the case of the proposed &£817m merger of NTL with Virgin Mobile, we have an opportunity to explore exactly what an offering, in all its baffling complexity, may mean.

First, let’s clear something up. Unlike many City deals, this merger (technically an acquisition of Virgin Mobile) is no piece of short-term, earnings-driven financial engineering. Its proposition is clear, strategic, and marketing-driven. The offering in question is quadruple. To the triple play of television, fixed-line telephony and broadband internet which now forms an integral part of cable industry marketing will be added the fourth one of mobile telecoms. This is immediately seductive, because it plays to the strength of an existing price-led strategy (cross-selling multiple services by discounting) and at the same time it offers NTL (now to all intents and purposes the UK cable industry) access to a new, younger ‘audience’ provided by Virgin.

More broadly, and speculatively, this deal might seem the dream ticket for both parties. In one bold, imaginative leap NTL has managed to leave behind all the unflattering sniping about its messy merger with Telewest and have itself positioned as a credible competitor to BSkyB in the land-grabbing media convergence game. Sir Richard Branson, on the other hand, sidesteps the awkward issue of what to do next with a narrowly based publicly quoted company (in which his personal vehicle Virgin Group holds 72 per cent) and will no doubt be looking forward to bringing his unique entrepreneurial customer service and branding skills to his biggest challenge so far/ that marketing-charisma bypass, the UK cable industry.

But will the offering, so grand on paper, actually work? The devil, as usual, is in the detail. Much depends on what control Branson wields over the merged companies. To be sure, he will be the most powerful single shareholder by far Рand we have recently seen what powerful individual shareholders can do, in the case of Vincent Bollor̩. But will he be on the board? Will his lieutenants be on the board? Will he even have the time for the mastery of detail required?

These are important questions because if the answers are ‘no’, the enterprise will almost certainly fail. Cable company culture is supremely process-driven and has been traumatised by never-ending consolidation. There is no guarantee that young Virgin Mobile customers will convert, even over time, into the household-decision makers who typify the NTL customer profile. Moreover, it will take more than some bolt-on marketing skills acquired by bringing Branson on board to turn NTL into a nimble, customer-facing, multi-platform media company. Nothing less than a complete overhaul of cable culture is required, and that in turn implies giving Branson carte blanche: power the NTL team led by Simon Duffy may not be willing to yield him.

If it were not for the person of Sir Richard Branson, this ambitious project might have ‘Centrica’ written all over it. But Branson is not known for his failures. In this case, the biggest Virgin enterprise to date, he cannot afford to be so.

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