Stars and pinstripes
28 January 1997
Last year media and entertainment mega-deals had to compete for editorial space with less stellar transactions, as the sector moved towards predator consolidation and diversification at all levels.
The year began with the £3bn MAI acquisition of United News and Media. The merger created one of the biggest media combines in the UK and one of the top 20 press and broadcasting groups in the world. Its effect was to send some media shares rocketing and to hone the strategic outlook of the major media players, fuelling speculation that a series of major acquisitions was to follow. The market was not to be disappointed.
In February Thorn EMI announced the demerger of its rental business from the EMI music operations and HMV retail arm. The long-heralded merger plan helped fuel a huge rise in the company's share price; at one point up 70 per cent year on year. At the same time EIDOS made its successful takeover bid for Centregold, the media distributor.
Sooty and his counterpart Sweep were sold to Guinness Mahon for more than US$2m. Guinness Mahon acquired international rights to the duo with Sooty immediately announcing plans for his own television series in Japan and the US. The two left their former owner Matthew Corbett smiling; his father having acquired Sooty for less than a £1 in 1948. Corbett himself was retained as an adviser in relation to the future exploitation of the puppets.
In the US, the merger of the summer featured Time Warner and Turner Broadcasting, valued at US$7.5bn. It created the world's largest media giant, surpassing even the Disney company. The deal almost failed the anti-trust/competition hurdle when Federal Trade Commission regulators expressed concern that the merger would lead to an unacceptable restriction of competition in the industry and in the cable television sector specifically.
In the UK GWR Radio, the rapidly expanding local radio station group, took control of its first national radio franchise with a £71.5m deal to acquire Classic FM. The deal again raised complex regulatory issues, and could not go through until GWR satisfied the Radio Authority, the industry regulator, that it could meet the stringent conditions of the recent Broadcasting Act.
The passing of the Broadcasting Act itself was a key event. Much discussed and hotly debated, the Act was designed to allow British media companies to grow and compete more strongly with larger foreign predators. Cross-media ownership is also addressed by the Act, which provides for deregulation within wider limits.
Activity was constant throughout the year in the television sector. If one deal has to be singled out it must be Carlton Communications' acquisition of West Country Television for £85m. West Country was one of Britain's few remaining independent stations, covering Devon, Cornwall and parts of Somerset.
November saw the sale for £305m of Westminster Press, the regional newspaper subsidiary of media group Pearson, to Newsquest.
The deal again kept the competition lawyers busy: the acquisition having originally been referred to the Mergers and Monopolies Commission in August. Westminster's titles include The Northern Echo, The Darlington and Stockdale Times and the Advertiser series.
The deal made Newsquest one of the three largest publishers of regional local papers in the UK. Newsquest was created through a management buyout from Reed Elsevier, the Anglo-Dutch media group, the previous year and in its short history has already acquired 120 regional newspaper titles.
The way things are looking, 1997 may even surpass 1996 in terms of activity. Immediately on the horizon is a deal which will create the country's largest privately owned television production company, the merger of Barraclough Carey Productions with Mentorn Films.
The two companies are responsible for a number of well-known programmes including Challenge Anneka and Space Precinct.
Other forthcoming media events cannot be mentioned without particular reference to the launch of Channel 5 and the Nintendo N64 games console in March, both of which will need to prove themselves quickly to break into their respective highly competitive markets.