City: Brooke too timid as magnates reach for sky

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DAVID MELLOR, the former National Heritage Secretary, thinks so; Michael Heseltine, President of the Board of Trade, shares his view; and so, amazingly, does Marjorie Mowlam, Labour's Heritage spokeswoman - the old rules governing takeovers among ITV franchise holders are so out of date and irrelevant to the modern world of entertainment and news provision that they could happily be abandoned, opening up a takeover free-for-all that would be governed only by normal competition laws.

The only mystery is why Peter Brooke, the present National Heritage Secretary, and, one presumes, a majority of the rest of the Cabinet, doesn't go along with the consensus.

Mr Brooke's approach, announced last week, is the softly, softly one - to preserve what he believes to be the best elements of the old system, including protection for regional programming, while at the same time allowing a degree of deregulation; in future each television company will be allowed to own two franchises regardless of size but no more.

Given the lack of substantive opposition to more radical reform, it's hard to see why Mr Brooke should have adopted such a minimalist and unprogressive approach. Perhaps he simply misjudged the situation, believing that even this limited shake-up, coming so soon after the last round of franchise awards, would be fiercely opposed.

Instead, he's found himself roundly criticised for being too timid. Even to Mr Brooke, it must by now be clear beyond any doubt that this can only be a half-way house in a process of reform that must ultimately include a wide-ranging review of the rules on cross-media ownership.

It is plainly ridiculous as well as unfair that Britain's most powerful newspaper magnate, Rupert Murdoch, can control a multi-channel television company that has subsumed the licensed satellite operator for Britain, British Satellite Broadcasting, while other newspaper groups are restricted to 20 per cent.

Mr Murdoch was ahead of the game in the multi-media revolution that's now on everyone's lips, and he was clever and audacious in circumnavigating the rules in pursuit of his ambitions.

But there's now a bigger anti-Murdoch feeling in government than for years. Ministers are muttering darkly about his increasing power and there's a real fear within News International, whose titles have been vicious in their attacks on the Government, of some kind of backlash.

As a first step, the Government might at least have loosened the rules to allow others to compete on a more equal basis. For the time being, ministers seem to have ruled this out - although they have promised to look at the issue again.

But if Mr Brooke has failed to please most, there are at least two aspiring television moguls who must be feeling relatively happy this weekend with the limited package of reform he has dished out - Michael Green of Carlton Communications, holder of the London weekday franchise, and Gerry Robinson of Granada, the North-west franchise holder.

Both are new to the industry but look certain to emerge as key players in the poker game of who buys whom that Mr Brooke's tinkering has unleashed. Mr Green has always been desperate to get into television, having first tried to buy Thames, then TVS, and finally Granada. In the end, he achieved his ambition by winning the London weekday franchise from Thames. His most obvious target would be Central, where he already has a stake.

Meanwhile, Granada looks a racing certainty to bid for LWT. Mr Robinson has told everyone who cares to listen that he would like to. Both bids would go a long way towards establishing the two groups as reasonably sized players on the world stage, although they would still be small compared with the big Hollywood studios.

Whether they make much sense for either Carlton or Granada in terms of shareholder value is another question. Both would require rights issues and - in the short term at least - the takeovers would mean quite substantial earnings dilution. With little or no rationalisation of programming allowed under the rules, the scope for cost cuts might also prove less dramatic than has been claimed.

But, perhaps most importantly, can premium prices be justified for companies in a declining sector of the industry? Traditional broadcast television is under assault on all sides - from satellite, cable and video. Telephone delivery of home entertainment, making it possible to schedule your own programming from the comfort of your own living room, will soon be a reality. No doubt, both Mr Green and Mr Robinson will find clever ways of justifying whatever they do, but shareholders may nevertheless take some convincing that it's not more about self-aggrandisement than anything else.