John Malone’s new interest in Europe could be a game-changer for Vodafone

My Week

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The Independent Online

John Malone is used to land-grabbing. A few years ago, the media tycoon surpassed the CNN founder Ted Turner as the largest private US landowner. It would be easy not to have noticed, given that much of that acreage is tucked away in Maine. But Mr Malone’s land-grab in the world of media and communications is much harder to avoid.

The 74-year-old has proved that he can do the corporate equivalent of patting his head and rubbing his stomach. No sooner has he pulled the strings that rolled together US cable firms Charter Communications, Time Warner Cable and Bright House Networks in $67bn (£44bn) of deals, than he has turned his attention back to Europe and Vodafone.

What is surprising is that Cable’s Liberty Global business isn’t trying to merge outright with Vodafone, or even buy it whole. The idea of asset swapping seems positively genteel for the man labelled Darth Vader by the former Vice-President Al Gore for his corporate jousting. His cat’s cradle of assets includes some or all of Virgin Media, the shopping channel QVC, the travel website Expedia, the Discovery Channel, the Live Nation concert promoter and the TV producer All3Media, maker of the detective drama Midsomer Murders. Oh, and by some measures, Mr Malone oversees the largest broadband company in the world.

For Vodafone’s boss Vittorio Colao, these talks offer further proof that he has no qualms about dismantling a sprawling empire in search of better shareholder returns. After dissolving the mobile giant’s US joint venture, his recycling of some funds into European cable TV assets has been moderately successful. Yet the Italian knows he must do more. Some investors think a demerger of Vodafone’s growth assets in India, Africa and the Middle East is the only way to get the shares moving.

The most attractive swap between this pair is for Vodafone to cede its German assets, including Kabel Deutschland, for which it outbid Liberty a few years back, so it can get its hands on Virgin Media in the UK. That would be a deal to give BT and Sky plenty to think about. I’m not sure it would end there, though. Just look at Hutchison Whampoa, which bought O2 Ireland and then returned to acquire the larger O2 UK business two years later.

Vodafone first dived into Germany when Sir Chris Gent turned the tables on Mannesmann, which had been driving into the UK by snapping up the mobile operator Orange. In the crazy days of mobile, when takeover prices were dialled sky-high, it was a case of buy or be bought. With crafty Malone at the negotiating table, I suspect the same holds true today.

Osborne’s hidden incentive to sell rest of Royal Mail

The privatisation of Royal Mail was not an overwhelming hit for the Government, or else Lazard, which led the too-cheap share sale, might have been kept on to sell the remaining 30 per cent state holding. When George Osborne announced his intention to make that £1.5bn disposal this week, it was no surprise the investment bank had been replaced by Rothschild on the advisory ticket.

What the Chancellor is slow to acknowledge is that the millions that will flow into Treasury coffers from Royal Mail shares will only offset the millions already committed on behalf of the taxpayer to get this asset off the books. Buried somewhere in the machinery of government, about £400m a year is spent on servicing the company’s huge pension fund liability.

If the privatisation was a resounding result for anyone, it would be Donald Brydon, the chairman. The only thing he didn’t manage to persuade investors and ministers to do is to pay his chief executive, Moya Greene, an increased bonus.

Royal Mail has earned itself a reputation as a real corporate moaner since it listed. How on earth can it survive, it bleats, when competition is so tough and letter-writing is in terminal decline? This, after its pension problem was whisked away and stamp prices were hiked. But it is true that Ms Greene, at £1.5m, is underpaid compared with her peers. It is an issue to ponder for Peter Long, who is joining from travel group Tui in September to succeed Mr Brydon.

The annual report discloses that Ms Greene’s salary rose 10 per cent this year. Meanwhile, Mr Long will be paid £300,000, far more than Mr Brydon’s £210,000. I wonder if an even bigger pay package for Ms Greene simply got lost in the post.

MA in games design shows how far we have come

Lara Croft lined up alongside the Daleks and James Bond on Tuesday at a black-tie fundraising bash for the National Film and Television School. Can Britain’s computer games industry finally be gaining parity with our much-lauded TV and film makers?

Ian Livingstone hopes so. The man who helped to launch Tomb Raider almost 20 years ago made a point in his speech that video games that were once spin-outs from successful movie franchises are now as likely to spawn the movie idea themselves. With 1,900 games studios in the UK, something must be going right.

Seeing a gap in the market, the NFTS is launching a new MA course in games design and development. Now that the UK has fixed the tax regime for the games industry, all it needs is more talent, which is why computer coding in schools is such a must.

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