01 May 2000

Suppose the French water-to-media giant Vivendi bought the rights to the UK's Premier League football. Farfetched? Perhaps. But consider that Vivendi is already a 25 per cent owner of BSkyB, that Vivendi plans, with Vodafone Airtouch, to roll out a European portal for mobiles, TVs and PCs, and that Vivendi's chief, Jean-Marie Messier, likes to keep Sky's operating shareholder Rupert Murdoch off-balance.

In the last few months, media players have been thinking more radically than ever before. Chalk it up to the Net, the popularity and potential power of mobile phones, digital technology and the stock market's recent love affair with anything that might fall under the definition 'content'.

Also, call it fear of being side-lined by bigger, more ambitious players.

"We used to call it movies and programming," says Tony Lynn, president of Playboy Entertainment Group. "Now they call it content, but it's not just the shows that are important." As crucial as owning content is access to the customer, brand names, size and money - preferably lots of it.

These factors are what drove Playboy to link up with the deep-pocketed Venezuelan Cisneros Group. Cisneros runs a big broadcaster, is a partner in Latin America's DirecTV, understands brands (because it is a Coca-Cola bottler) and, of course, has lots of money. Playboy's bunny brand is a stand-out, but it has been less dextrous in making its content available on all distribution platforms.

In Europe, some media players are circling their wagons to get the size and distribution needed to survive and thrive. Witness Pearson Television's link-up with CLT-UFA, itself a several-year-old joint venture of Bertelsmann's UFA and Luxembourg's CLT. The new company, which will have one chief exec and a separate stock listing, will be a European broadcasting and production powerhouse. It combines Pearson TV's production clout, from Baywatch to Family Feud, with CLT UFA's 40 TV and radio stations across Europe, most under the RTL brand, but including a large stake in the UK's Channel 5 and in France's M6. The new, as yet unnamed, company expects to have four billion Euros in revenues.

Pearson chief Marjorie Scardino says that the new company will allow more risks in programme-making because they have a guaranteed distribution base. She's right. Similar thinking is also behind cable company UPC's purchase of multi-country broadcaster SBS. This deal creates a company with the distribution footprint clout to be able to buy and make more compelling content, as well as experiment with multi-media programming for TV screens and the Internet.

"It's about scale, stupid," says Harry Sloan, SBS's chief executive officer.

The problem, even for relatively big companies like UPC-SBS, is that there are much bigger players out there. And they have the same aspiration: to own the entire chain, from programmes to distribution.

Spanish telco Telefonica has already spent 5.5 billion Euros to buy Dutch entertainment producer Endemol. It says that Endemol's programmes, including the cult hit Big Brother and the Net-cast show, will be used to fill up its distribution pipes, from broadcasters like its Antenna 3 station in Spain, to its Terra portal, to its Spanish digital satellite platform Via Digital.

Telefonica also owns broadcasters and cable operators in South America and is "in talks" with both US Spanish language networks, Univision and Telemundo - as well as Latin American TV stations over possible tie-ups.

The head of Telefonica's media unit, Jose Antonio Rios, says he wants to be among the top ten media players in Europe. The fact that Rios announced this while at a cocktail party in Cannes during the annual MIP TV programming market festivities has caused other independent production companies to dust off their valuations! The sheer size of Telefonica's wallet is daunting.

Although other Euro telcos like BT and Deutsche Telecom say they do not feel compelled to own content, as long as they can have access to it, this could change. Meanwhile, Richard Eyre, the new head of content for the Pearson TV-CLT/UFA tie-up, has said he wants to forge a "production village" of independents. In the end, which of the convergence media giants survives will depend on how they execute their plans.

The Kirch Group/Mediaset link-up has put together a wide array of advertising sales, TV channels and production companies, but there has been a singular lack of focus. It reminds me of the failings of the original link-up between CLT and UFA. Neither Bertelesmann nor CLT could concede enough control from their headquarters to let the new company grow.

Recent moves by Rupert Murdoch to prepare the estimated $30-$50 billion stock flotation of Sky Satellite - a holding company for News Corp's global satellite assets - reveals how this media maverick sees the future. He believes in multimedia, interactive content platforms, like the upcoming launch of WebMD across digital cable, satellite, Internet and print. News Corp has a one billion dollar marketing and promotion deal and a 50/50 international joint venture with Healtheon/WebMD, the four-year-old start-up of Netscape founder Jim Clark.

Sky WebMD will have extensive data banks and programming assets, so it can provide news and information, products and services, for consumers and professionals. Murdoch sees Sky WebMD as the first of many such multi-media platforms, all to be launched through a News Corp portal.

In the past, we've called it the battle of the broadcasters, but now it's more the battle of the platforms. Vivendi probably won't buy the Premier League rights, but he might bid, if only to keep Murdoch guessing.