The real world

Welcome to the real world
I’ve been to media conferences in the past two weeks, the European Media Leaders Summit in the West End last week and NextGenTV in Canary Wharf this week, listening to media and telecoms executives talk about the merits of converged businesses. But when it comes down to it companies outside the conference room are putting out a different story:

Yesterday the board of ITV said it was rejecting a £4.7 billion buyout offer from cable operator NTL, saying that the proposed cash and share deal ‘materially’ undervalued the company. The board further said that there was little, if any, strategic logic for ITV to combine with NTL from ITV’s point of view.

Indeed, what’s starting to become apparent is that some kinds of convergence are more convenient than others, depending on what kind of company you are. If you are a telco or a cable company, you are very happy to have more content in your system. As Malcolm Wall, the chief executive, content, for ntl Telewest said yesterday, “Content must be bundled with access to strengthen an access play.” But as ITV shows, they don’t really need that kind of strength right now—or at least not at the price NTL was prepared to pay.

That’s not to say that broadcasters don’t see other kinds of convergence as working to their advantage. Given the upheaval that their advertising business models are facing as more people get PVRs and try to fast-forward through the commercials as they watch their shows, these broadcasters are trying to find new ways to keep viewers from doing that. This means a new engagement with technology and devices more than ever before. And as Mike Shaw, president of sales and marketing for US broadcaster ABC, which makes $3.5 billion in advertising revenue a year, said, “It’s not just a question of TV moving to a different device [such as an iPod]. It’s a question of reassessing who we are as a company.” Shaw told me that ABC currently only makes online ad revenues in the “Tens of millions of dollars” online although he clearly is hoping for more.