BG can huff and puff as much as it wants and sprinkle accountants' magic dust over the balance sheet. But the unvarnished truth is that it largely lost the battle, and the intellectual argument, over the pricing formula that will apply to its transportation arm.
The company had two weeks to pore over the MMC report and pick some crumbs of comfort from the wreckage. All it has been able to find is an extra pounds 194m in allowed revenues spread over five years and another 7 per cent on top of its operating expenditure.
On all the key issues, notably the value of the assets on which it can earn a return and depreciation policy, the MMC has taken the side of Ofgas. More ominously for the millions of Sids created by the last government, where Ofgas has led other regulators seem bound to follow, starting with Ian Byatt at Ofwat.
The image conjured up yesterday by BG is of a score draw with Ofgas. That is an odd sort of result to claim when its asset base has just been slashed by pounds 5bn, its free cash flow reduced by pounds 380m, the dividend in all probability halved and 19 million customers offered more off their bills than they would have got had BG sued for peace a year ago.
Was it all worth it? The answer undoubtedly, has to be no. The pounds 10m BG actually spent defending its corner, armed with its battalion of economic, legal, engineering and public relations advisers is, admittedly, a drop in the ocean. More seriously, it has wasted a year fighting a battle it was always going to lose when that time could have been more profitably spent driving the business forward and learning to live in a more realistic environment where returns to shareholders are aligned to what they actually paid for the company rather than some notional current cost replacement value of assets which have long since been written off.
BG took its case to the MMC on behalf of Sid, whom it was claimed would otherwise be the victim of the biggest smash-and-grab raid in corporate history. Now that he has duly been mugged in full view of the law, who should he blame? The previous administration who sold him the business on false pretences or the present management who encouraged Sid to believe BG had a cast-iron case (35,000 of them wrote complaining to Ofgas at BG's suggestion).
After a year of uncertainty, the reaction in the City was perhaps understandable. Any result is better than no result and whilst it could have been better, it could certainly, as Ms Spottiswoode pointed out, have been still worse for BG.
Nevertheless, the MMC's ruling demonstrates the way that the regulatory winds are blowing and, having lost the argument, Mr Giordano might feel it is time to follow the example of his deputy chairman, Philip Rogerson, and start heading for the departure lounge.
ITC's thinking has become muddled
The Independent Television Commission may be about to put its foot in it again. Having already allowed one of the two rival consortia bidding for digital terrestrial television to change its bid via the back door, it's now gone hot-foot back to the other and said it can have the licences provided it ejects Sky. Whatever happened to due process? Quite apart from laying itself wide open to judicial review on whatever it does eventually decide, the ITC seems to be falling victim to some very muddled thinking on all this.
Let's start at the beginning. There are two bidders for digital terrestrial. One is Digital Television Network, which started life as just International CableTel but was then expanded by the addition of Lord Hollick's United News & Media. The other is British Digital Broadcasting, a powerful consortium of established broadcasters including BSkyB, Carlton and Granada.
The perceived problem with this second bid is the participation of Sky. BSkyB already has a monopoly of analogue subscription TV and will almost certainly dominate digital satellite too. Do we really want to allow Sky to dominate digital terrestrial too, the argument goes. The problem is that BDB has the rather more credible bid, both in terms of finance and programming. To rule it out on competition grounds might seem silly if the upshot is no digital terrestrial, or at least one unable to command public support.
So egged on by the competition authorities in London and Brussels, along comes some bright spark at the ITC to suggest that the obvious solution is to have BDB ditch Sky. Everything else will remain the same, you understand. Sky will continue to provide programming (movies and sport), the marketing and the encryption technology, but it will be excluded from equity participation.
Brilliant! What on earth does this achieve other than the purely cosmetic purpose of being seen to strike a blow against Rupert Murdoch? This might go down well among that small minority of people who feel passionately about Mr Murdoch and his ambitions, but it doesn't make any practical difference at all.
In terms of what the viewer actually receives, BDB would continue to be a monopoly of established broadcasters including Sky. The downside would be that Sky's main commercial interest would lie elsewhere and there would be no incentive for it to make digital terrestrial go with a bang. The ITC should have no truck with this messy compromise. It should be taking each bid on its merits, warts and all. The fact that it is not makes the case for a rethink by the new government of media ownership policy all the more urgent.
Labour enjoys fruits of Clarke's hard work
Do last month's bumper retail sales mean Britons simply celebrated the Labour election victory in traditional fashion, by going shopping? Or is there more to it than post-election euphoria? The national jubilation, which did seem to affect more than the 42 per cent of the electorate that voted Labour, probably played a part in sending high street spending surging in May. But consumer confidence, and spending, had been on a firm upward trend since at least the middle of last year. The initial impetus came from tax cuts that reached pay packets at the end of April 1996.
Since then we have had the interest rate reductions in the middle of last year, the first building society flotations, and another round of tax cuts. The results have been predictable. In short, Kenneth Clarke's policies worked. He set the economy firmly on its way to the closest we have got to a boom since the late 1980s.
Unfortunately for him, a Labour Government is enjoying the euphoria. But it will also have to take the corrective measures. Spend now, for soon higher taxes and interest rates will spoil the pleasure. Neither Gordon Brown nor Eddie George look like people who appreciate the joys of shopping.Reuse content