Ask an American media buyer to name a major British media company,
and they will be stumped. They might hazard a guess at The Times,
uncertain as to Rupert Murdoch’s nationality - ’he’s not really
American, is he?’ A continental buyer might not have much more luck. I
remember a recent list of the top 50 global media companies. There was
no British company in the list - or was United number 50?
Does this matter? We all know the answer. Day-to-day, it probably
doesn’t.
The UK market is large enough - just - to turn a decent profit, as long
as things carry on as they are. But that’s just it, they haven’t, here
or abroad. That’s why Roger Haupt, the man behind BDM, was a relative
unknown just three months ago but is this week’s ’King of Madison Ave’
(Feature, p32); why NTL’s Barclay Knapp has risen from obscurity to be
the leading player in the UK cable industry this past year; and why
Carlton and United must take on the understandable suspicions of their
clients to forge a meaningful British force (Analysis, p4; Leader,
p27).
Does scale matter? Haupt and his media buying supremo, Jack Klues, the
chairman of Starcom, will tell you no - as long as you are a contender,
which, of course, actually means yes. You have to be top five or
whatever number it is that constitutes the Premier League. But there
isn’t a Premier League in the world that contains 50 members.
The logic behind the media-owner mergers is the same as that behind the
agency deals: scale brings with it cost savings on people and real
estate and extra income to fund investment, and opportunities for
vertical and horizontal integration in order to further complete that
virtuous circle. I only wish it didn’t bring with it jargon hell.
Of course, United and Carlton will - predictably and correctly - claim a
merger will allow them to fund better programmes which they can better
exploit with the help of all the synergy jargon in the preceding
paragraph. They must also fund investment in digital media. Equally
predictably, and no less correctly, the regulators and media buyers will
point out that the proposed merger will bring us yet another step closer
to the dreaded single ITV sales point.
No-one’s entirely right or wrong, but the debate is parochial. We all
know deep down that the existing regulatory framework cannot last. It
cannot keep up with the pace of change being forced by the twin
catalysts of new technologies and the globalisation of business. The
alternative to a Carlton/United merger is an overseas predator pouncing
(someone may still).
We may not like the consequences but must accept the inescapable
conclusion: British companies cannot compete in the world’s Premier
League without consolidation. It may be unpalatable, but United and
Carlton have little choice.
stefano.hatfield@haynet.com
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