MEDIA: FORUM; Should advertisers worry about the MAI merger?

Does the MAI merger with United News and Media hold any fears for advertisers? Lord Hollick has talked about the possibility of doing deals across the new company’s broadcast and newspaper interests. Is it likely to happen? Would advertisers let it? And what are the chances for the ailing Express titles?

Does the MAI merger with United News and Media hold any fears for

advertisers? Lord Hollick has talked about the possibility of doing

deals across the new company’s broadcast and newspaper interests. Is it

likely to happen? Would advertisers let it? And what are the chances for

the ailing Express titles?



The late great Lord Beaverbrook will no doubt be spinning in his grave -

there’s something almost surreal about the Daily Express, the ‘great

crusader’, being taken over by Clive Hollick, a Labour peer. Officially,

of course, it’s not a takeover - last week’s deal between MAI and United

News and Media was described by Lord Stevens, United’s chairman, as ‘a

true merger in every sense’. And indeed, under the agreement, United

shareholders will take 50.7 per cent of the equity and MAI’s will have

49.3 per cent.



But no-one doubts the fact that, of the two men, Hollick is the one who

will exert the greatest influence in the long run. The fortunes of MAI

are distinctly on the up, whereas the Express titles have been on the

wane for some time. Hollick, who will be chief executive of the new

conglomerate, will clearly be in the driving seat.



Of course, United isn’t just about the Express papers and the other

national daily, the Daily Star. It owns regional newspapers, including

the Yorkshire Post, plus assorted trade magazines and exhibitions

businesses. But the focus of the new company must be MAI’s ITV

franchises, Meridian and Anglia, the TSMS sales house and the Express

titles.



In the US, in the wake of the ABC-Disney and Time-Warner-Turner deals,

the products of big mergers have been dubbed ‘communiglomerates’ and

we’re becoming familiar with the rationale for these deals.



On announcing the deal, Lord Hollick outlined the mutual benefits that

each side would bring to the new company. ‘There are lots of

opportunities for cross-promotions between our press and broadcast

interests,’ he said. ‘Look at the success that News International has

had in this field.



‘The new company plans further expansion into UK terrestrial and

international television, but also into cable and satellite. We want to

have a balanced portfolio between advertising and pay TV. But it’s

possible that if we want to expand into some new ITV areas, we might

have to divest some of our regional newspaper interests.’



That is being read as a clear indication that the Yorkshire Tyne Tees

ITV franchise will be a future target - MAI already has a 14 per cent

stake in Yorkshire. But Hollick also made a strong case for the

potential of the newspapers. There will be a substantial revitalisation

programme and he clearly believes that they can be turned around after a

long period of decline.



Hollick even had a message for advertisers: ‘There are possibly some

opportunities to sell advertising deals across our range of media

interests,’ he stated. ‘But we have no specific plans in this area. We

have to be extremely careful because of the issue of conditional selling

and we recognise that it’s a very sensitive area for advertisers and

agencies. We must go with the grain on that.’



Is this what advertisers wanted to hear? Does the deal have major

implications for media markets? Does the merger make sense at all?



Of course it does, John Perriss, the chairman of Zenith Media Worldwide

and also of the Media Policy Group of the Institute of Practitioners in

Advertising, says. He points out that it’s part of a global trend

towards consolidation among media companies.



‘I don’t think that ownership per se is something that the advertising

business would have views on - especially when it comes to social and

political implications. Our interest is purely in what happens to media

markets in terms of space and airtime. We want to see media regulated in

the same way as other markets are regulated - it should be an issue of

more concern to the Mergers and Monopolies Commission rather than bodies

such as the Independent Television Commission. We are entirely in favour

of that.’



Perriss believes that rehabilitating the Express titles will be a

struggle. ‘Many feel they are in terminal decline and even though

they’ve spent a fortune stealing the Daily Mail’s best writers, the

circulation of the Daily Express is still falling. As for the Sunday

Express, I find it amazing that it has now fallen behind the Sunday

Times. It seems impossible that there will be a way back. So you wonder

what Hollick really has in mind for the newspaper division.’



Bernard Balderston, a member of the Broadcast Action Group of the

Incorporated Society of British Advertisers and the media manager of

Procter and Gamble, says the biggest issue is the possibility of

conditional deals across the new group’s TV and press interests. ‘That

wouldn’t be attractive. It is a non-starter as far as we are concerned.



‘On the other hand, the merger could work in advertisers’ favour. There

had been speculation about MAI’s ongoing commitment to media and there

was a tangible feeling that ITV was going to be dominated by Granada and

Carlton. But now that MAI has taken the decision to become a multi-media

organisation and, perhaps, extend its interests in television, it will

maintain the balance of power between the three main players. That will

be welcomed as it will underpin the current sales system - and it is in

our interests to maintain three equally strong sales operations.’



Jim Marshall, the managing director of the Media Centre, is upbeat about

the new company’s potential. ‘It’s good news in particular for the

Express,’ he says. ‘Hollick can provide the resource and the energy to

get United motoring again. I agree that the Express titles have become

marginalised in some respects, but many of the fundamental editorial

flaws have been ironed out recently - both the daily and the Sunday

titles have been looking a lot better.



‘There is so much you can do if you are part of a large organisation -

not just in terms of capitalisation but in terms of cross-promotion,

too. You only have to look at Murdoch to see how it can work. It’s the

way the world is going. Advertisers just have to be aware of it. But I

can’t see any immediate danger of conditional selling. We’ve yet to see

evidence of it at News International. It’s just not possible to control

the market in that way - not yet, at least.’



Leader, page 33



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