If it had been anybody else, the headlines would proclaim NTL as the main protagonist of the deal. It is after all, if the rumours prove to be correct, about to buy out Virgin Mobile with a combination of cash and shares. But because this deal happens to involve the UK’s most famous and popular balloonist come entrepreneur, it almost feels like it’s the other way round.
The Sunday Telegraph broke the story yesterday, and its front page headline revealed: “Branson takes on Murdoch in media battle.” Further inside, its main business news headline said, “Branson plots £4.5bn cable deal to create media giant.”
NTL, the cable TV operator which is still in the throws of merging with Telewest, is planning to offer 323p a share for Virgin Mobile, with the virtual mobile phone company’s leading share holder, Sir Richard Branson, giving up his 72% stake, in return for a 14% ownership of the new company, plus a seat on the board.
This morning, fresh from the operating theatre, Sir Richard, after removing his surgeon’s mask, said of the rumoured deal, “I read the Sunday Telegraph stories. They’re not too far off what may be happening.”
But while Sir Richard may only have 14% of the enlarged NTL, he will be the largest single shareholder, and the company will be re-branded as Virgin, making use of the ubiquitous brand name.
NTL/Virgin will be a new power house, perhaps strong enough to rattle the hegemony of BSkyB, and will boast 5mn cable subscribers, which includes 2.5mn broadband and 3.3mn pay TV subscribers. Thanks to the the Virgin add on, 5million mobile phone subscribers too.
Some have even speculated that the new enlarged TV company could even threaten the BSkyB sponsorship deal for Premiership football - although we are not sure how adding a mobile phone company to the group will automatically mean it can outbid BSkyB for football coverage.
What is significant about the planned merger is that it will create the UK’s first quadruple play TV/telecoms company, combining fixed line and mobile telephony, broadband and pay-television.
And with Vodafone already promoting its mobile phone video service, with the’3′ tie-ins with Channel 4 and ITV, the combination of mobile telephony and TV all under the same roof could be very powerful. Maybe, if TV on mobile phones really does take off, perhaps it could justify outbidding BSkyB for the rights to broadcast Premiership football - eventually.
With BSkyB recently buying up Easynet, and with BT advancing with its plans for broadband-based TV, the tussle for control of the new media world is heating up.
For all that, thanks in part to VoIP via Wi Max, - the broadband successor to Wi Fi - and with a growing number of content producers set to broadcast over the net, the market could become a good deal more fragmented. The mobile phone companies themselves will feel increasingly threatened by VoIP. Meanwhile Google, or maybe eBay with its VoIP and alternative means to generating revenue from advertising, or even Microsoft with its software, could yet emerge as the ultimate winners.
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