View from City Road: Flextech deal shows HTV is switched on

Programmes, not hardware, will drive the entertainment industry in the next millenium. So yesterday's deal between HTV and Flextech comes as a breath of fresh air after the ITV ownership battles, the focus of which has been cost- cutting synergies between franchises.

The HTV deal is primarily about creating additional programming. It stems from Flextech's desire to have a stake in moulding new programmes to feed its cable and satellite interests. Flextech - 60 per cent owned by Tele-Communications Inc, a giant US group that has both cable networks and programming ventures - is clearly bent on turning itself into a smaller version of its parent.

For HTV there seems to be only an upside: it clears its debts and it also wins the promise of further investment and the opportunity to sell programmes both into the ITV network and Flextech's cable network. In addition, it can use Flextech's international contacts to acquire and market programmes globally.

The question is whether this deal provides a workable format for other small ITV companies. They face an uncertain future, increasingly squeezed out by the Carlton/Centrals of this world.

If they can see their way to develop a role as programme providers to the cable companies busy wiring up our towns, they may find they can secure their future rather better than their bigger brethren. BSkyB may even find that, not before time, it has some competition.

There is another implication for the market. Shareholders worried about how current ratings can be sustained would take cheer from the idea of big, cash-rich cable companies like Nynex gulping down stakes in the ITV tiddlers.