Skip to main content
CNN.com
Search
Home World U.S. Weather Business Sports Analysis Politics Law Tech Science Health Entertainment Offbeat Travel Education Specials Autos I-Reports
WORLD BUSINESS

Branson, Murdoch square off in media war

By Julie Clothier for CNN
Adjust font size:
Decrease fontDecrease font
Enlarge fontEnlarge font

(CNN) -- Control of struggling British television company ITV has become the unlikely focus for a battle between two of the titans of the business world.

Both media mogul Rupert Murdoch and Virgin entrepreneur Richard Branson are used to getting their own way when it comes to new ventures.

But with Branson stepping on Murdoch's toes with an aggressive expansion into the media marketplace, the Australian-born tycoon looks ready for a fight -- which only one of them can win.

Using his distinctive Virgin logo -- first used to brand his record label of the same name in 1972 -- Branson has created companies across a range of industries since the mid-1980s.

He has rattled dominant players in the airline business, started a line of soft and alcoholic drinks, ventured into bridal wear and make-up, and has ambitious plans to launch tourists into space.

But it is Branson's latest venture -- Virgin Media -- which has set him on a collision course with Murdoch.

Murdoch already owns Britain's biggest daily tabloid newspaper, The Sun, as well as U.S. news television network Fox. Although he is chairman of BSkyB, his son James is CEO of the firm, which operates Sky Digital, the most popular subscription television service in the UK and Ireland.

Branson, meanwhile, is the majority shareholder in cable company NTL -- currently a smaller player in the UK television market.

But with NTL due to change its name to Virgin Media next year, NTL also has UK commercial broadcaster ITV in its sights as a takeover target, part of its plans to offer television as well as broadband, fixed-line and mobile telecommunications services.

On Friday though, Murdoch put a serious dent in Branson's media plans when BSkyB bought an almost 18 percent stake in ITV, which has been badly hit by a falling audience share and a decline in TV advertising revenues.

As a result, Branson immediately demanded a sale, saying BSkyB's accumulation of ITV's shares was a "blatant attempt to distort competition."

But BSkyB's stake remains below the 20 percent threshold permitted by UK media ownership rules.

Blunt-talking Murdoch and flamboyant, media-friendly Branson are now squared up in a standoff that risks turning into a personal duel, according to commentators.

CNN's Financial Editor Todd Benjamin said Branson had been outfoxed and outmaneuvered by Murdoch.

"Branson is perceived as a great entrepreneur -- which he is -- but he's come up against the formidable Murdoch," Benjamin said. "The bottom line is welcome to the world of hard business."

Moving into the media world is a logical move for Branson, and while he is not a major threat to Murdoch's empire, the Australian has made it clear he wants to protect his territory, Benjamin said.

"BSkyB's stake in ITV has clearly upset NTL. Richard Branson has been outfoxed by Murdoch who was willing to pay a lot more for his ITV shares than NTL was willing to pay.

"Branson is now trying to stop Murdoch from keeping his stake in ITV -- he's even gone so far as to say it threatens democracy."

Guy Bisson of London-based consultants Screendigest told Agence France-Press that BSkyB's new stake in ITV had "to be taken as a deliberate spoiler on the ambitions of NTL."

Theresa Wise, media analyst with global management consulting and technology services company Accenture, told CNN she understood why Branson was crying foul over BSkyB's accumulation of ITV shares.

"It is problematic for him if Sky acquires an 18 percent stake. It makes it a more difficult acquisition given that NTL has got a lot of debt. They have to raise the finance and they have to convince the rest of the shareholders to go with them if they want to be acquired," she said.

"It is an absolutely brilliant move by James Murdoch because there are lots of other people chasing (ITV)."

ITV was launched in 1955 as a commercial TV rival to the publicly funded British Broadcasting Corporation and was originally made up of 15 regional broadcasting companies.

By 2000, following a series of mergers, Granada and Carlton controlled all the regional broadcasting licenses. Carlton and Granada merged in 2004 to create Britain's biggest commercial broadcaster.

Murdoch's apparent strategy to stymie Branson's moves into the media world appears to be working.

On Tuesday ITV rejected a $8.9 billion takeover offer from NTL, saying the proposed combination made little strategic sense and undervalued the business.

"The board believes that whereas there is obvious appeal to NTL in gaining control of ITV's substantial and successful business, from ITV's perspective there is little, if any, strategic logic for ITV to combine with NTL," ITV said in a statement to the London Stock Exchange.

To make matters even more complicated, German broadcaster RTL may yet enter the fray.

Whatever happens, 75-year-old Murdoch appears unwillingly to share his media powerhouse status with Branson -- and will likely put up a good fight to prove so.


Flamboyant Branson, left, and blunt-talking Murdoch are battling for a stake in ITV.

    RELATED

THE BRIEFING ROOM

NEWSLETTER

    NEWSLETTER

  • Sign up for the daily Briefing Room Newsletter and other CNN.com e-mail alerts.external link

FEEDBACK

    FEEDBACK

  • What do you think of The Briefing Room? Send your comments and thoughts to:  ireport@cnn.com
Advertisement

Advertisement

Career Builder.com
Quick Job Search
  More Options
International Edition
CNN TV CNN International Headline News Transcripts Advertise with Us About Us Contact Us
Search
© 2007 Cable News Network.
A Time Warner Company. All Rights Reserved.
Terms under which this service is provided to you.
Read our privacy guidelines. Contact us. Site Map.
SERVICES » E-mails RSSRSS Feed PodcastsRadio News Icon CNNtoGo CNN Pipeline
Offsite Icon External sites open in new window; not endorsed by CNN.com
Pipeline Icon Pay service with live and archived video. Learn more