CLOSE-UP: LIVE ISSUE/COMMUNICATIONS BILL - How will the Communications Bill affect UK media? Relaxing the cross-media ownership laws will spark a frenzy

It has been a long while since the word "frenzy

has been abused so roundly in the nationals. Frenzy as in feeding frenzy. Some even went as far as to supply pictures of sharks to illustrate the thrashing around in the media lagoon that we can expect in the wake of the Communications Bill.

Just about every UK media owner is reckoned to be up for sale thanks to the incredibly liberal proposals contained in the Bill, which could make our market the most open in the world. Relaxation of cross-media ownership laws will not only allow existing UK media owners to extend their fiefdoms into new sectors; it will give the big US media owners carte blanche to enter the market.

Much of the gossip and theorising focused on the Government's apparent desire to punish ITV. Depending on whichever source you listen to, this was begun either by Clive Hollick or more directly by the Department of Culture, Media and Sport and the Department of Trade and Industry.

Lord Hollick was squeezed out of ITV ownership in the last round of consolidation and would presumably be satisfied if Carlton and Granada were squeezed off the media map altogether. A buoyant market will also enable him to sell his stake in Channel 5 at a profit. For their part, the DCMS and DTI are said to be enraged by the mess ITV made of digital terrestrial.

The Government appears to have decided to hand ITV to the Americans to stop it falling into the hands of the Germans in the form of RTL. And if one of the huge US media owners with Hollywood assets comes into terrestrial broadcasting in the UK, it will change the market's dynamics - they have access to lots of top programming on favourable terms.

It's not just about television, of course. There are plenty of plum radio assets potentially in play and an almost infinite variety of cross-media ownership permutations.

Frenzy indeed. Interesting times. But who will get to play shark and who will be the panicky swimmers?


Granada is now free to pursue its much speculated upon merger with Carlton - and the fact that the ITV network is now run by the newly appointed joint managing directors, Clive Jones (from Carlton) and Mick Desmond (from Granada), will smooth that process. But there are flies in this ointment.

For instance, it is incumbent on Carlton to maximise shareholder value, which would be achieved by turning its back on cosy merger plans. Carlton's Michael Green seemed to be signalling as much when he responded testily to renewed talk at Granada of a single ITV. Granada should "put up or shut up", he snapped. Carlton may prefer to talk to foreign media owners with ambitions in UK television, whether from the US (Disney, say, or Viacom) or Europe (RTL, for example).

But if one of those players did have big ambitions in the UK, it would make far more sense to strike a killer blow by taking out Granada with a pre-emptive strike. Granada, after all, has all the assets for making programmes too, so from that point of view is a safer bet.

Many in ITV believe this is a huge possibility within the next couple of weeks. Owning the bigger of the two companies would hand bidders the strongest cards in subsequent manoeuvring.

Somewhere along the way, the likes of Scottish and Grampian, currently owned by Scottish Media Group, will also be tidied up. Granada and Telewest each own 17 per cent of SMG and the cash-strapped Telewest will be keen to sell up. Granada will be looking at the timing of a possible move for that stake, leading to a full SMG bid.

Although ITV companies can now buy Channel 5, observers say this is highly unlikely while an ITV merger is still on the agenda. It would make the merger fraught with difficulties, not least being the increased likelihood of triggering a monopolies inquiry.

BSkyB and Channel 5, however, is seen as a marriage made in heaven - and one that would diminish the value of the ITV assets. The threat of a well-funded Channel 5 with access to prime programming would put ITV1 under huge pressure.

The bottom line is that, within weeks, the owner of one of the big Hollywood studios is likely to have at least a foothold in a terrestrial television channel in the UK.


Print is likely to be the quietest sector according to many sources - after all, it has effectively been deregulated for donkey's years. Newspaper groups also tend to be dominated by hands-on proprietors with the resources to repel all boarders. But many believe that Trinity Mirror, which is publicly quoted and has no press baron-type figure at the helm (its chairman is Sir Victor Blank), will become a target and will be broken up into its national and regional components. The big question here is who will want The Mirror and The People stable of titles and where it would naturally best sit. Politically, Guardian Media Group would be its spiritual home but GMG (actually the Scott Trust runs the GMG papers) has little appetite for the tabloid dogfight.

It is inevitable that someone, somewhere will be running the rule over Pearson and its plum Financial Times asset - a title which has been a rumoured target in the past for Rupert Murdoch.

Many newspaper groups will be drawn toward radio, but many analysts doubt if they will find enough value to justify buying. Those with powerful regional and local publishing empires, such as Viscount Rothermere's Daily Mail & General Trust, would feel the most commercial logic in such a move.

Emap is considered an enigma. Its combination of radio and magazine assets targets an attractive youth audience and the likes of Virgin would be a useful addition. But observers wonder if its management is aggressive or vigorous enough to go into expansion mode once more - especially after it burned its fingers in the disastrous US foray.

The most interesting case is perhaps IPC Media, the UK outpost of the AOL Time Warner behemoth. Its stated policy is to increase dramatically the percentage of revenues taken outside the US. It could now explode into action, moving from its largely print UK beachhead into electronic media.


Scotland could be the place where the new cross-media ownership rules are tested first, with Scottish Media Group now having the option to convert its 29 per cent stake in Scottish Radio Holdings into full ownership.

SMG, however, may first have to fight a rearguard action against a takeover by Granada, which would want to break up the Glasgow-based group, keeping the STV and Grampian TV assets and spitting out the rest. This in turn would put Virgin on the market and as media owners can now own more than one national licence this might be of interest to Classic FM's owner, GWR.

GWR will itself be of interest to Daily Mail & General Trust, its biggest current shareholder, which has made no secret of its desire to up its stake. Many expect DMGT (and indeed other newspaper groups with radio interests, such as Guardian Media Group and Trinity Mirror) to increase their presence in the medium. Regional newspaper publishing and local radio promise a good fit, although the continued feeling is that radio assets are overpriced.

But that might not put off the US radio giants such as Clear Channel and Viacom, headed by the chairman and chief executive, Sumner Redstone.

The acquisition that might be easiest for them is reckoned to be Chrysalis.

Chris Wright still owns 28 per cent of the company, ruling out a hostile bid, but Wright has a history of building up businesses and selling out at the right time.

The UK's biggest group, Capital, run by David Mansfield, its chief executive, could well go on the acquisitions trail, provided it doesn't become a target itself. Capital only narrowly missed snapping up Virgin a couple of years back.

However, radio companies believe that their sector could turn out to be the least affected. They argue that the Bill is actually not as liberal and deregulatory in their medium as in others. The public interest test still effectively applies.