View from City Road: Securities houses reach for the Sky

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The Independent Online
What does Kelvin MacKenzie's resignation as managing director of BSkyB mean for the future of Britain's premier satellite TV company? Not very much, was the general view yesterday among media analysts, who took the explanation of a personality clash with Sam Chisholm, the chief executive, at face value. All it proved was that tabloid newspaper editors and television don't mix, was the view. Certainly BSkyB's fortunes, which most analysts regard as rosy, are not perceived to have changed at all. As long as the subscriptions keep rolling in, the odd casualty along the way, however headline-grabbing, makes little difference, most of them were saying. But then they would, wouldn't they?

There is barely a securities house in town that is not doggedly trying to woo Rupert Murdoch for the flotation of BSkyB. Getting an audience appears to be only half the game; coming up with the most flattering valuation is the other. One house, which will be spared the embarrassment of being named, has pencilled in an unbelievable pounds 6bn. Smith New Court, at around pounds 2bn, seems to be about the lowest, and can as a consequence kiss goodbye to any possibility of participation.

For the moment the idea of a BSkyB float owes more to wishful thinking by fee-hungry investment bankers than anything else. Mr Murdoch and the other shareholders have yet to broach the subject publicly. But as many seasoned City observers are pointing out, there is a quite compelling case for it from Mr Murdoch's point of view. Any incoming Labour government, however modernist in its approach, is going to wreak bloody revenge on Mr Murdoch; his present dominant and privileged position in the British media will not be left untouched. It might be better to float off an interest now than be forced into it later.

The commercial case too looks a strong one. BSkyB may be out of the woods financially, but it has yet to prove itself in the ratings. Recent figures suggest that audiences are in decline across the board. In the seven months he was there, Mr MacKenzie appears to have done nothing to enhance the position of the free channels, Sky One and Sky News. Though the pay channels will continue to grow - if only because of the growth of cable - the level of churn makes it impossible to assess at what rate. If the City's fancy valuations really can be made to stick, now might be as good a moment as any to float. Whether you would want to invest is another matter.

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