The cable industry received a major shot in the arm this week after
three of its main players agreed a merger that will create the UK’s
largest integrated telecoms and entertainment company.
Cable and Wireless, the UK-based telecoms giant, is merging its UK
operations with those of Bell Cablemedia and the Nynex CableComms Group.
Also included in the deal is Videotron Holdings, which has a well-
developed cable network, including one million homes in London. Its
inclusion follows a conditional agreement by Bell Cablemedia to add a
further 56 per cent stake in Videotron to the 26 per cent it already
holds.
Crucially, the deal also brings C&W’s Mercury Communications telephone
company together with the cable networks to create a powerful sales
proposition for the domestic market.
Mercury, although well established among the business community, is
eager to extend its network to include more domestic customers. BT’s
share price fell 4p on Tuesday morning when the deal was announced.
But the merger also throws down a gauntlet to BSkyB and the satellite TV
industry it dominates. The new company, called Cable and Wireless
Communications plc, will be a powerful force in the TV market and will
be better able to negotiate on an equal footing with programme providers
of BSkyB’s magnitude. To date, BSkyB has been able to dictate terms to
the relatively small cable operators.
The additional telephony proposition, made possible through Mercury’s
involvement, strengthens the advantages of cable over satellite as a
means of delivery for multi-channel TV. BSkyB’s shares fell 15p on news
of the deal.
Cable and Wireless Communications has said that it will provide ‘local,
national, international data and mobile telecommunications, together
with multi-channel television and Internet services.’ Around six million
cabled homes in the UK will be able to receive the combined TV and
telecoms services.
Simon Esberger, the Mercury Communications marketing director, said the
merger may lead to talks with agencies about long-term global branding
assignment for C&W. But he stressed that Mercury’s relationship with
Howell Henry Chaldecott Lury would be unaffected.
