The week in review: Fast moves

This was last Friday's week in review from the web site...

The week kicked off with an interesting series of M&A news items coming out of Italy. Swiss incumbent operator Swisscom has made a €3.7bn bid for Milan-based Fastweb, the triple play pioneer. It’s an interesting move from the usually staid Helvetic republic. Swisscom has itself been trying to make a business out of IPTV, not terribly successfully: after many technical hiccups, it launched its own Microsoft-powered service a year behind schedule. The company now says it has picked up some 30,000 users since launching the service in November. But a tie-up with Fastweb could inject Swisscom with some expertise from a veteran of the IPTV/triple play model. And it could mark the establishment of one of the first international IPTV players in Europe.

That is if Mediaset decides to sit back after all. The Silvio Berlusconi-owned concern, which is Italy’s largest media company encompassing television, film and publishing, is also reportedly interested in Fastweb. Although the company denied such interest, late Thursday another report emerged that seemed to say Mediaset wouldn’t rule anything out as far as Fastweb was concerned. Mediaset is also figuring very strongly in speculation about possible buyers for TV production company Endemol, which seems to finally, finally be getting ready for a sale by majority-owners Telefonica.

The executives that ruled out a Fastweb buy said that Mediaset wanted to focus its attentions on an Endemol bid, but I can see that if private equity houses and others start to look like more credible Endemol buyers, perhaps Mediaset might just pick itself up and look for a more local buy like Fastweb. In any case, both Endemol and Fastweb would add bows to Mediaset’s strings, albeit of entirely different tones.

On the subject of dominant media companies, ITV, the UK’s largest commercial broadcaster, had to take another big step down in interactive TV this week, as it formally lost its broadcast slot for its currently suspended ITV Play channel. ITV Play had been under major scrutiny by regulators for irregular accounting in its various interactive, money-based games. The issue of how consumers are charged for premium rate interactive TV phone lines, used not only for games like the ones on ITV Play but for all those popular voting-based shows like Big Brother and Pop Idol, is still not resolved and could have very far ranging repercussions in the industry, considering how popular the participation format has become.

In the UK, it’s not just the commercial broadcasters getting heat from regulators, though. The BBC said that it would suspend its BBC Jam educational web site from 20 March after complaints from educational companies that the site was putting commercial education publishers at an unfair disadvantage because of the BBC’s market dominance. It’s crazy that a non-profit company like the BBC can get in trouble for creating a good educational site—I’d always thought that the less profit-motivated educational tools are, the better.

The suspension of BBC Jam was also interesting because it’s one of the first instances in which the BBC has been taken to task for potentially stifling competition amongst commercial organisations. This is the same issue that is at the heart of other new initiatives that the BBC would like to pursue, such as its iPlayer, which some have said could put other content companies at an unfair disadvantage in the market. We should watch this space to see how this plays out.

Viacom this week took their dispute with YouTube one step further by filing a $1bn lawsuit for copyright infringement. Viacom’s argument is that Google’s YouTube has profited enormously from the traffic they’ve had over the site from people who come to view clips from programmes owned by Viacom—these include shows from Comedy Central, Nickelodeon and MTV among others. And, the argument continues, despite Viacom’s request earlier this month for YouTube to remove some 100,000 clips from the site, other clips continue to be posted and YouTube is not doing enough to stop the problem at the gate.

Various pundits think that the suit is more posturing than anything else, and that there might be a settlement out of court in the end. The outspoken Internet entrepreneur Mark Cuban, who himself is subpoenaing YouTube for the names of people who upload unauthorised clips from movies made by his production company, pointed out in his blog that whether or not Viacom settles or goes through with the suit, it will be a win-win situation, since at most the legal fees could be around $10 million but a settlement would be much more substantial, and certainly a $1bn award would be even more substantial than that. And in any case the company will most likely come out with an agreement not unlike the ones struck between YouTube and music companies. The upshot will be more proactive filtering from YouTube and/or legitimate content posts from Viacom itself.

I think that other companies may well follow in Viacom’s shoes, but just as many will continue to strike deals with this video giant, until the next virally popular service comes along.