The prospect of an NTL bid for ITV has had analysts and commentators rushing off in all directions. Perhaps not surprisingly, since even NTL seemed taken aback by the story when it leaked on mediaguardian.co.uk. I was actually on the phone to its corporate affairs department, who were still insisting they never commented on merger reports, when the confirmation flashed up on my screen.
“Media-NTL-ITV (urgent) – NTL says approached ITV regarding combination” and “London, November 9 (Reuters) – British cable operator NTL has approached British broadcaster ITV to explore a possible combination, the company said on Thursday.” There was a pause at the end of the line. “I’ll get back to you” she said.
On Friday morning, most business pages were dismissive. “A marriage made in NT-Hell,” proclaimed Alex Brummer, city editor of the Daily Mail. “It is a truly desperate and silly idea, which I imagine will quite quickly be assigned to the waste bin when the two sides get round the table to talk,” said Jeremy Warner in the Independent. “Branson meets Emmerdale: dream or nightmare?” asked the Lombard column in the Financial Times.
“What on earth is NTL thinking of?” asked The Guardian. “The ink is barely dry on the cable company’s merger with rival Telewest and its takeover of Virgin Mobile and yet here it is cosying up to ITV. The only possible conclusion is that NTL hopes to obfuscate its appalling record in customer service and its inability to take on Sky by focusing minds on yet another deal.”
So what was NTL thinking of? Step forward Sir Richard Branson. The FT proclaimed: “Branson is backing a bold attempt by NTL to change the landscape of broadcasting in the UK by combining the US-listed cable group with ITV, the flagging British commercial broadcaster.” The Virgin boss – who has always hankered after owning a proper TV company – owns 11% of NTL, which is about to change its name to Virgin Media.
The Times suggested there was “more merit” to the idea than initially met the eye. “ITV is strong on content, weak on distribution; NTL is strong on distribution, weak on content,” wrote its business editor, James Harding. He said a tie-up with a cable operator would mean ITV was not so exposed to the vicious cycles in the advertising market. The broadcaster would “step squarely into the digital age”, becoming part of a “triple play” offering: television, broadband internet and telephony. In fact, this understates the offering as perceived by Branson and NTL, who already claim they offer “fourplay”, with the added ingredient of mobile. Some say the merger offers even more numerical options. With programme production and ITV’s Friends Reunited Web content, how long before Branson is talking about his “six-pack”?Harding said NTL could benefit from ITV’s content because it was “churning customers at an unsustainable rate”. Programmes from ITV could help to sign up new subscribers and, more importantly, keep hold of the existing ones. NTL has the potential to tap ITV’s library of programmes and its stable of programme makers to develop new pay-TV channels – for example, a dedicated Coronation Street channel.
Yet that overlooks the fact that NTL already offers its subscribers ITV1 and its pay-TV channels ITV2, ITV3, ITV4 and ITV Kids. How will a change of ownership help sign up new subscribers and keep existing ones, particularly when NTL has to double its debt from £5bn to £10bn?Despite the early scepticism, by Sunday morning City mouths were watering at the prospect of a juicy takeover battle. With ITV now seen to be in play, the Sunday papers sought out new bidders. They included all the obvious suspects – RTL, the owner of Five, the terrestrial channel that is shedding viewing share as fast as ITV itself, and a host of private equity firms who’ve already run their eye over the ITV figures. Perhaps even Time-Warner.
The papers also “lined up” likely chief executives, whatever that means. “NTL has lined up Michael Jackson, the former chief executive of Channel 4, to run ITV if its audacious bid for the broadcaster succeeds,” said the Sunday Telegraph. “It is believed that the lifelong television executive has been identified by NTL and Sir Richard Branson because of his knowledge of the UK broadcasting industry and experience running new media companies.”
Does “identify” mean he’s on a list of names, or he’s actually been approached and made some sort of commitment? Other papers preferred the other frontrunner, who by chance, has run NTL in the past. “Stephen Carter, former head of broadcast regulator Ofcom, has become the hot favourite to run a combined NTL-ITV media giant in the light of recent private equity approaches,” said the Express on Sunday.
There’s also a former ITV company boss waiting in the wings – Malcolm Wall, now the chief executive of NTL’s content division. According to some, Wall is one of the architects behind the approach to ITV. But no mention of the man who was recently all over the papers – and the front page of Broadcast – as the last frontrunner for the ITV job. Andy Duncan, Channel 4 chief executive, may feel he’s well out of it.