Michael Green and United? No, surely not
Thursday 08 February 1996
The grandly renamed United News and Media is the obvious target for Mr Green; it fits both his politics and his strategy. City media analysts were last night pooh-poohing the idea, suggesting that Carlton's main concern right now is to consolidate its position in ITV, but don't underestimate Mr Green's ambitions as a newspaper proprietor. Nor is he the only one interested in United and its Express titles. Andrew Lloyd Webber, Andrew Neil and Tony O'Reilly's Independent Newspapers are also on the prowl, although their interest is confined to the national titles alone.
Lord Stephens, chairman of United, has so far refused to sell these for anything but silly prices. He wouldn't want to deal with Mr Green either (they don't get on), but if Carlton was to make an offer for the whole company, he would have to at least consider it.
What about Lord Hollick? His natural target in national newspapers would be Mirror Group, owner of 43 per cent of this newspaper. Just as Mr Green would give his right arm for the Express, Lord Hollick would give his left for the Mirror titles. This is a much tougher nut to crack, however. For a start, the manner of Lord Hollick's departure from the Mirror Group board would make an agreed deal an uphill struggle; a hostile bid would be pricey.
Then there is the fact that Mirror Group's share of the national newspaper market makes it the only group beside News International to be banned under the new rules from outright ownership of an ITV franchise. MAI controls two. That in itself is not an insurmountable hurdle, for assets could be sold to meet the threshold. But it would complicate matters. Furthermore, MAI, with its curious mix of TV, money broking and advertising interests, might be thought more target than predator in the coming shakeout.
For the time being all is just speculation. Don't think that because of the Independent's connections - 43 per cent owned by Mirror Group, 43 per cent by Tony O'Reilly - it has an inside track. We know no more than you. One thing is certain, however. In a year's time the corporate structure of this fast-changing and, in stock market terms, hugely outperforming sector will be wholly different. Watch that Mr Green. Something's up.
Give BT the benefit of the doubt
On paper, BT's pounds 600m venture into Germany looks a winner. This is a monopoly telecoms market, due to be liberalised in 1998 or before under European Union plans for deregulation. The opportunities seem boundless. BT has two strong partners, RWE and Viag, both with their own substantial communications networks and access to large customer bases of their own.
BT is also obeying the first rule of international expansion: stick to the business you know. Furthermore, by making itself the common factor in a network of alliances with groups in half a dozen European countries, BT could eventually become a powerful trans-European operator, a bit like Heathrow is to the international airline business.
But a sound strategy is not always the route to business success. As France has shown, an obstinate monopoly and a government slow to accept the spirit of the European deregulation initiative are a powerful block on innovation and competition. None of the potential competitors with France Telecom have yet found a convincing way into the market.
Germany is a big and fast-growing market with plenty of room for newcomers. Deutsche Telekom, moreover, seems to adopt a more enlightened attitude to these things than its French counterpart. But the fact is that entry to a new communications market is a multi-faceted problem on which progress has to be made on several fronts at once.
The key technical issues are the conditions under which competitors are allowed to interconnect with Deutsche Telekom's local network, the extent to which they can negotiate agreements to use other companies' telecoms infrastructure and the pace and cost at which they are able to build their own.
Having sorted that lot out, the new competitor must also turn in a brilliant marketing performance to pull in the customers. Then comes the question of the regulatory framework, which as yet is far from clear because it has not been set up. BT's allies are convinced that it will be better than that in the UK, but they cannot yet be sure.
Any estimate of the attainable market share and the cost of entry is therefore bound to be no more than a shot in the dark, especially as there will be two partnerships striving to whittle away at Deutsche Telekom. In Britain there was just one in the early years of privatisation, Mercury. It still struggles to make a return.
Nobody can know when the German market will stop being a black hole and turn a profit. The business plan looks sound, but it can be no more than guesswork. This is a risky venture and one that shareholders are entitled to worry about. But perhaps they should hang onto their hats and let BT get on with it. After all, the BT stake in MCI in the US has proved a far better bet than the sceptics first thought. For the time being BT deserves the benefit of the doubt.
Spare us this sanctimonious rubbish
An awful lot of sanctimonious rubbish has begun to pour from the collective pen of the financial public relations industry. It all stems from what has become known as the Flemings/Financial Dynamics affair. It is hardly necessary to bore you with the details; suffice it to say that someone has been caught red-handed a-leaking and a-manipulating, the stock-in- trade of the public relations man. We must be regulated, cry some of the industry's worst offenders, it's the only way. The hypocrisy doesn't end there, however; it gets worse. You would never catch us doing that sort of thing, say those who do it without getting caught. And worse still: we have long advocated the case for bringing the public relations industry under the auspices of the Securities and Futures Association to ensure adequate professional standands. And yet worse: there is much incompetence in this industry but if everyone were more like us, there wouldn't be a problem. Oh, please spare us.
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