NEWS: Cable merger creates rival for BT and BSkyB

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.

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.



Topics

Become a member of Campaign

Get the very latest news and insight from Campaign with unrestricted access to campaignlive.co.uk , plus get exclusive discounts to Campaign events

Become a member

Looking for a new job?

Get the latest creative jobs in advertising, media, marketing and digital delivered directly to your inbox each day.

Create an alert now

Partner content