Cable interference will delight the Digger


I have an apology to make to NTL and Vivendi. Earlier this week I mentioned to a colleague that Stephen Byers was constructively boring, rather in the fashion of a Gordon Brown speech or a statement to shareholders from Associated British Foods. As if to prove me wrong, Byers makes the most controversial decision in his brief career as Secretary of State for Trade and Industry.

Referring both Vivendi's purchase of a 25 per cent stake in BSkyB and NTL's purchase of rival cable operator CWC Communications is hardly the move of someone wanting to keep his head down - especially as in the latter case, he overruled John Bridgeman, the Director General of Fair Trading. Indeed Byers has walked into the sort of political storm he has spent his career avoiding.

The main beneficiary of these moves is Rupert Murdoch. If Vivendi was blocked from cementing its position in BSkyB, this could only reinforce the Digger's influence over the cable TV group. Preventing NTL from buying CWC would stop the long-overdue consolidation of the cable TV industry into a force to challenge BSkyB's dominant position in extra-terrestrial TV. Byers claims that if Barclay Knapp, the aggressive American behind NTL, got his hands on CWC, this would cut down competition in the market for pay-per-view TV services. Mr Secretary of State, you are wrong.

For nearly a decade Murdoch has dominated this market by virtue of being the main wholesaler of TV rights. Murdoch companies have contracts to show almost all the top football matches, as well as the best boxing, golf, cricket and much of the rugby. They resell these to the cable companies - or to digital TV, as ONdigital has learned - on BSkyB's terms (unless forced to play fair by the regulators).

To compete with Murdoch you need deep pockets. Unless the cable companies club together they are not in a position to outbid him for rights. For sure the arrival on the scene of ONdigital creates a third force, but the collapse of NTL's deal to buy CWC would seriously weaken the main competitor to Murdoch.

Byers might have angered the media mogul by blocking his purchase of Manchester United. But if Murdoch had the choice of giving up Manchester United to ensure that Barclay Knapp was not able to get hold of CWC, he would happily have made that sacrifice.

NatWest plays it canny

If the offer timetable runs to its rather pedantic plan, Bank of Scotland's pounds 21bn bid for NatWest will close on Boxing Day. Not wishing to spoil the holiday season by having to deliberate on the offer, most institutions have already decided to give Bank of Scotland the thumbs-down.

The logic, as told to me by a number of leading institutional investors, is that Bank of Scotland is rather good at running its small, well-focused operations but does not have the firepower to run a sprawling leviathan like NatWest.

But here is the dilemma. The City does not want NatWest to remain independent either. It is praying that Royal Bank of Scotland makes a rival bid.

Sir George Mathewson, though, is too canny to show his hand so soon. He is waiting until he knows whether the Bank of Scotland's bid is going to be referred to the Competition Commission before making an offer. This means any bid will not come before the second week in December.

For all his posturing about keeping NatWest independent, Sir David Rowland will know that striking a friendly deal with Royal Bank is preferable to merely being served up like a Haggis on Burns Night. There is clearly a job in the Royal NatWest structure for Sir David's appointee, Ron Sandler, should a deal be struck.

There may even be a job for Alastair Lyons, who joined NatWest yesterday. Lyons, of course, ran National & Provincial building society and said it would remain independent, before selling the society to Abbey National. He then moved to NPI, saying the insurer would remain independent, before selling it to AMP. Now he is at NatWest. Is it third time lucky, or is there a pattern forming?

A smash hit at Emap

Tomorrow Kevin Hand will start to show that he is in charge at Emap. The genial Francophile has had to tread carefully as his predecessor, Robin Miller, is still the group's chairman and any radical changes would bring the inevitable suggestions of implied criticism. However, the de- rating of Emap earlier this year enabled Hand to ignore such niceties.

The slew of disposals last week were the first sign of a new "Hands-on" management style. With the half-year figures he will say that the company will now cease to be run with separate units for business publications, consumer magazines and radio, but will be managed by subject matter - so that the car mags will be in the same unit as the motor industry titles, and the likes of Q and Smash Hits will be grouped with the radio stations. Emap shares were strong last week and if this continues, the company could again become the market's darling.


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