Sunday, November 19, 2006


Smugly, Malcolm pushed Saturday's Guardian across the marmalade: Ashley Seager writing that Price fall opens way for Brown to raise petrol duty, singing from Malcolm's Friday recitatif. This after the New York Times editorial, Counting the Vote, Badly (16th November) finally got round to saying what Malcolm was declaiming some time ago. Synchronicity, Malcolm, nothing more: we promise.

But Malcolm is already off on a new complaint, or rather an old complaint newly revisited: the nefarious intent of Murdoch's mob. This, of course, is provoked by the sunset raid of BSkyB to snatch some 18% of the shares in ITV.

The essential problem here is what to do about ITV. To all intents and purposes it is a broken brand: Malcolm suggests that new-comers might start with Scott Bedbury's discussion, originally from 2002, on the topic, which is available here or here. Bedbury was the consultant behind the branding of Starbucks and Nike, by the way.

Bedbury advises that broken brands should:
Revisit where your brand started out. What did the brand stand for originally? Why did it resonate with customers in the first place? What were its core values? Are they still present? Just as important, are they still relevant?
Well, in the case of ITV, the unique-selling-point was that ITV was not the BBC. It was not "Auntie" and it did not follow the behest of the Establishment. ITV was populist. For years it got by, and even prospered on providing a diet of soaps and sport, with quiz-shows as the fall-back. Furthermore, the public-service and local-content requirements have now been loosened and seem likely to be dropped: ITV is now a national brand (in England and Wales at least), untrammelled by too much regulation. Even so, ITV seems rudderless and close to an iron-bound coast lee shore. And ITV's response? It made the captain, Charles Allen, walk the plank.

In fact, Allen at one time seemed to be a man with a plan. He recognised that ITV1 was busted, and set about both limiting the damage and diversifying. So, the network was rationalised, and more emphasis given to digital and other distribution media. At first, it seemed to work: profits were up and costs were controlled (for a full account, as of two years ago, see David Rowan's Evening Standard interview. His nemesis would seem to be Anthony Bolton, fund manager of Fidelity (sic!) who previously held some 14% of ITV shares, who first dispatched Allen, then on Friday sold out to BSkyB for a tasty premium. Since Bolton was largely instrumental in the dumping of Michael Green as ITV chairman-designate in 2003, this is another notch on the pistol. And, because BSkyB's "poison pill" effectively makes ITV dead meat, has screwed the remaining share-holders.

So, to get back on track, Malcolm sees two issues here:
  1. Should we be concerned about the fate of ITV? Or should we be by-standers, watching the wreck, and enjoying the glug-glug-glug of a once-noble vessel sinking below the waves? (This is also known as the Express posture.)
  2. WTF do we do about the evil Murdoch empire?
In the case of (1), the answer is very definitely "yes", if only because ITV owns a fair bit of band-width. Murdoch has already sniffed the bum of Channel 5, by some accounts. Would anyone place bets on him getting around the media cross-ownership provisions (for more on which, see below)? Alternatively, how can he be allowed to dictate the rules for any ITV merger (say with NTL, with Branson acting as guardian angel)? Would Chelsea be allowed a blocking 18% share of Man U?

As for (2), there is little hope of reversing history. Murdoch has enjoyed the Danegeld paid by successive British governments, including this one we've got, for a quarter of a century—so let's not get snide about Ethelred the Unready.

All is not lost. There are some straws in the wind in today's Sunday Times. Notice:
  1. How the article specifically lays responsibility for the raid on James Murdoch (i.e. the Young Pretender) as Chief Executive of BSkyB. Murdoch fils does not have an unblemished record as an entrepreneur (for example, refresh your memory here). So, either young Jimmy has hidden talents, or someone pulling the strings wants a fall-guy. And there will be repercussions: note that the other 600lb gorilla, Branson, is affronted and irate. Hee-hee, says Malcolm.
  2. Now read this, hidden towards the end of the Sunday Times piece, v-e-r-y carefully:
the uncertainty over ITV’s future looks set to rumble on for months. One possibility is that Sky may seek to use its position to facilitate its own entry into free-to-air broadcasting in Britain. One suggestion is that it may look for an asset swap with RTL, taking ownership of Five in exchange for RTL acquiring its stake in ITV.
Malcolm reads that as a statement of Murdoch's intended end-game. Remember that BSkyB is lumbered with the technology of the last century. The future, in urban areas at least, is fibre-optics and broadband networks. Getting hold of Channel 5 (where SkyNews already have a toe-hold) would give Murdoch a terrestrial channel, access to the Freeview (and any subscription add-on) service, a seat at the same table as the BBC, and more clout with the broadband providers. Doubtless, grumbling and spitting feathers, Murdoch then would ungraciously concede control of ITV to RTL (who presently own Channel 5). Since that keeps Branson out of the equation, blocks the NTL-ITV deal, good result for the Dirty Digger.

Malcolm does not like that at all, at all.

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