There was hope and disquiet across Westminster, UK media and social media this week, when ITV and Sky TV owner, Comcast, announced they had reached a £1.6 billion ($2.14 billion) deal.
ITV’s chairman, Andy Cosslett, said that together, it and Sky will form “a UK champion, with the scale and resources to better compete with global streaming platforms”.
His UK commercial broadcaster had received a welcome injection in capital and power. TV is rapidly changing and consolidating, and ITV did not have the capacity to prosper on its own. It needed a lifeline and one was found in America’s Comcast.
The merger will be the subject to scrutiny by the competition authorities. They might apply restrictions that prove prohibitive.
Their inquiry will be accompanied by plenty of carping about a UK icon falling into overseas hands and the danger that presents. The regulator may be moved by that argument. But itshould understand that if it is, ITV may not survive.
Like so many other UK companies, ITV, the long-time main rival to the BBC, had run out of road. It required help if it was to battle successfully in the gladiatorial media landscape and none was coming, not from its own shareholders nor from anyone else in the UK.
What plays out in such situations is by now a familiar ritual. A well-known, frequently historic UK name agrees to be bought by an investor from abroad.
Cue much huffing and puffing from politicians and commentators about “the sale of UK family silver”, the “erosion of our identity”.
The regulators take a close look. At the very least, the proposal is subject to prolonged delay, a lag in today’s fast-moving global business environment that both parties can ill-afford. It’s actually damaging, holding up progress, preventing anything major happening for months on end.
Meanwhile, all the time, there is complaining galore about “the loss of a valuable UK asset”. It’s bizarre and wrong.
Fine if there are genuine security concerns but not in most cases, when the necessity is to get on and, as Mr Cosslett says, “to compete”.
On the same day he issued his statement, airline easyJet also revealed it was being sold, for £5.5 billion to US finance firm, Castlelake. It, too, will be the subject of official scrutiny.
While that is going on, easyJet, a pioneer in no-frills aviation, will be stymied, its management unable to make strategic decisions.
Its rivals can look forward to a hiatus in which easyJet’s typically bold moves are put on hold.
Again, there will be gnashing of teeth or, how do they phrase it, “concerns raised” over a UK airline falling into foreign ownership.
Instead of protesting and trying to block and prolong, and putting the suggestion under a microscope (one that can give the appearance of belonging to a bygone age, that is ill-equipped to cope with the modern, connected business world), that time and energy would be better spent on examining why this occurs.
Years ago, when Cadbury was the subject of a takeover bid from Kraft, I went to see the Cadbury chairman, Roger Carr.
Now Sir Roger, he told me how he believed the historic UK chocolate maker would not succumb to an aggressive US corporate consumer of food-and-drink brands.
Mr Carr said he was confident Cadbury shareholders would see the long-term value the company afforded; how there was serious, underlying potential in the business waiting to be tapped into; how they would not be moved by the Kraft approach because they would look further ahead.
To which I said: “Come on Roger, you know and I know it’s all about the number.”
He shook his head. No, he was confident they would take a more considered view. Even allowing for the fact that the charming Mr Carr was smiling as he said it, the investors subsequently ignored his, and Cadbury’s, predictions and projections – well-argued as they were – and accepted Kraft’s increased offer.
At easyJet, it was not so long ago that the chairman Sir Stephen Hester announced his arrival by saying: “I see so many opportunities for this iconic brand in the coming years.”
Now look. The problem lies not with the identity of the buyer, as is loudly proclaimed, but with the seller.
Those investors that swoop on UK assets see something the UK institutions don’t; or rather, if they do, they are not prepared to take the risk and wait.
They prefer to cash in and sell out. It’s institutional short-termism that holds back British commerce and investment – not only in publicly quoted stocks but right across spending and committing, be it in manufacturing, retail, transport, creative and media, tech ventures, property schemes and infrastructure projects. You name it, they all suffer.
The fund managers don’t want to part with their cash, or put it into a company, a plan, an idea, a proposition, that might take a while to bear fruit or possibly fail.
The result is that well-grounded start-ups, digital unicorns or long-established businesses are offloaded, when what they require is the patient, dedicated application of vision and faith and money.
Returning to Cadbury, I made some calls in the City and extracted from analysts the sum they thought the confectionery maker's owners would accept.
From the outset, I proffered that figure, only for Mr Carr and his advisers to ridicule it.
They, meanwhile, were producing strategy papers and presentations as to how, under their stewardship, an independent Cadbury was destined for a rosy future.
The investors were listening and nodding their approval, while holding out for Kraft to make a higher offer. Once the interloper reached that level, they accepted.
The usual yardstick was, and is, a 30 per cent premium, which is where Kraft reached and what I, with help from the City analysts, had said.
Everyone was happy: Kraft secured its prize; Cadbury shareholders made a decent return; Cadbury directors could hold their heads up and retreat with honour.
Except they weren’t – British politicians and media cavilled that yet another valuable trophy was lost.
To be fair, the outcome was not as bad as some, in that the Cadbury brand still exists and some of its products are made at the original Bournville site. But it’s now part of a wider US concern.
The lesson here is clear: it’s no use the moaners moaning when the solution lies in front of them, when UK institutions and capital providers refuse to open their eyes and see what others do. Regulators, MPs and the rest, please note.
