City firms tune in to media merger boom
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Firms are gearing up for a spate of merger activity in the broadcasting sector to follow the passage of the Broadcasting Bill this summer.
Stephen Cooke, partner at Slaughter and May, said: "The new rules will pave the way for further consolidation and we expect media groups to take advantage of the changes."
Slaughters is legal adviser to Channel 3 television companies HTV and Westcountry Television which are rumoured to be takeover targets.
Prior to the last wave of takeovers in the sector, Slaughters advised LWT, snapped up by Granada in February 1994. The firm also acted for Thames Television, acquired by Pearson in 1993.
Changes in takeover rules brought in by the Bill will enable national newspaper groups and television companies to merge with each other for the first time. Legislation also going through sets the stage for conventional media groups to expand into cable and satellite broadcasting. Rules which limit ITV companies to two franchises will be scrapped.
Alan Peck, managing partner at Freshfields said: "Law firms are tooling up for the changes which should give added impetus to activity on the international stage as well as at home."
Some companies have already used lawyers to facilitate mergers in expectation of a more relaxed takeover regime. Television group MAI has merged with Daily Express parent company United News & Media. This was achieved via a complex legal structure which effectively puts United's newspaper interests outside the parent group, allowing the merger with MAI to go ahead.
Allen & Overy, Ashurst Morris Crisp and Norton Rose were involved in the MAI deal, announced in February.
Cooke at Slaughters said "ringfencing" or "warehousing schemes" could be put in place to facilitate other media mergers before the Broadcasting Bill becomes law.
But future takeovers would still have to comply with competition law and mergers which involve television companies would need to be vetted by the Independent Television Commission.
"These are exciting times for media groups and the new regulations will allow companies to grow their operations in ways not possible up to now," said Cooke.
Peck added: "I think future activity will be international and involve telecoms groups as well as the media."
Telephone companies are eyeing the media sector with increasing interest because their networks can carry new services such as video-on demand and the Internet.
Freshfields acted for US telephone company MCI recently when it formed a strategic alliance with BT. BT took a stake in MCI, second largest long distance carrier in the US.
McKenna & Co has been called in as independent lawyers to help investigate Jupiter Asset Management with the aim of refuting allegations of irregularities made in recently-launched magazine London Financial News.
The firm has been appointed by the chair of Jupiter, John Duffield, along with accountants Price Waterhouse to conduct independent inquiries.
LFN claimed that Jupiter is being probed by City regulator, IMRO, the Investment Management Regulatory Organisation, over staff incentive contracts relating to the promotion of in-house funds to Jupiter's clients.
Duffield, who has appointed investigating lawyers and accountants to restore "clients' peace of mind", has denied the allegations. He has issued a writ claiming damages against LFN though legal firm Olswang.
Peter Smith, corporate finance partner at McKennas said: "Independent law firms are increasingly being called in to investigate the activities of investment businesses, reflecting the complexity of regulation in this field."