MEDIA: PERSPECTIVE - The merger of CLT and Pearson sets the pace for the UK

Michael Green and Clive Hollick must have been cheering from the sidelines. The merger between Pearson Television and CLT-Ufa could be just the nudge needed to send UK broadcasting dominos crashing towards consolidation.

Michael Green and Clive Hollick must have been cheering from the

sidelines. The merger between Pearson Television and CLT-Ufa could be

just the nudge needed to send UK broadcasting dominos crashing towards

consolidation.



The two companies are both shareholders in Channel 5 and their merger

gives the new combine just under 65 per cent of the fifth terrestrial TV

channel. That might sound like a whole heap of not very much since

Channel 5 is undoubtedly a squitty little thing in the scheme of global

broadcasting.



But while its audience share may still not trouble the digits of both

hands, Channel 5 is hurtling towards profit this year. Its new chairman

- Pearson TV’s chief executive Richard Eyre - is promising more money

for quality schedules and the channel is shining through with new ways

of dealing with advertisers.



Not a bad investment for Pearson/CLT, then, and one that undoubtedly

throws a new light on the proposed merger of Carlton and United News &

Media.



A consolidated Channel 5 makes some ITV consolidation all the more

irresistible, despite the gulf in their market positions, by recognising

the need for a well-resourced company at the helm of a modern major UK

broadcaster.



But it’s not just the Channel 5 issue that turns up the heat on the

Carlton/United deal. Pearson/CLT creates a new pounds 15 billion TV

powerhouse that dwarfs both Carlton (pounds 4.2 billion) and United

(pounds 3.8 billion). The new company has assets that span 22 TV

channels in Europe, with a combined audience of 120 million viewers a

day, and 18 radio stations in 11 countries with 25 million listeners a

day. Finally we have a UK broadcaster with a European business base.



The Pearson/CLT merger is not without its potential pitfalls. CLT is

jointly owned by the German media giant Bertelsmann and Audiofina,

controlled by the Belgian financier Albert Frere. Culturally, it’s an

interesting and potentially tricky mix and, as the first company to span

Europe’s fragmented commercial TV and production industries, Pearson/CLT

is in unchartered waters.



What’s more, although the new company may prove to be giant on the

Continent, it will still be no match for the Time Warner/AOLs or Disneys

of this world. But it does pave the way for further co-operation between

Pearson and Bertelsmann across Europe and positions both parties well

should the rules governing foreign ownership of US TV networks be

revised.



Meanwhile, our UK broadcasters are looking ever smaller, more fragile

and old-fashioned. Forced into competing in the increasingly

international broadcasting arena with feet set in regulatory clay, the

likes of Carlton, United and Granada have limited futures without the

green light to consolidate. In the meantime, Eyre, the former chief

executive of ITV, can enjoy thumbing his nose at his old ITV bosses from

the top of the European broadcasting tree.



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