Tuesday 20 February 2018

New horizons in new media

SHANE ROSS `JESUS Christ,'' screamed the ruddy-faced man at me in the Shelbourne Hotel. ``The last time I saw you was Christmas, 1974. You were out for the count on the floor of the Soup Bowl restaurant. I don't think you remember?''

Naturally enough I couldn't. I wanted to curtail the conversation. But the stranger began to redeem himself: ``I love your articles in the Sunday Independent; but I will never understand why Tony O'Reilly didn't muzzle you years ago.''

Nor will I.

The appointment of Tony O'Reilly as Executive Chairman of Independent News and Media will have little immediate bearing on the loves, the lives or the language of the journalists in the Independent Group. Except in one respect.

Despite the mischievous suggestions of those with an anti-O'Reilly stance, the Chairman probably does not even know most of the journalists in the Group. I have never received even a hint of pressure from him to go easy on anyone although I know that one or two of his friends have been the butt of the odd jibe. Irish businessmen are astonishingly prickly. Ireland is tiny. Protests are often made to the directors of newspapers about controversial articles. Yet O'Reilly and his journalists rarely cross paths. Except in one respect.

And that respect? Their paths crossed last week when Tony O'Reilly made an uninvited entry into his employees lives.

No, he did not make journalists wear muzzles. He made many employees better off. On the day that the Chairman took over the reins, Independent News and Media shares shot up 95 cents to euro 7.25. Three years ago many of the luckier lads in the Group bought Independent shares at £2.85, the market price. Last Friday evening they stood at euro 7.30, a gain of 15 per cent. In the meantime staff have received growing dividends and a 48 per cent tax-break on their purchases. So last Tuesday many of the employees felt pretty happy at the choice of a new Executive Chairman.

So did the stock market where the word was out that Liam Healy, 71, current Chief Executive, could not go on for ever. Healy was highly regarded in the only place it counts the market. Uncertainty is the enemy of a healthy share price. One or two potential buyers were thought to be holding back until the succession was settled. O'Reilly's acceptance of the post was deemed the optimum outcome. It had been widely rumoured, but more in hope than expectation.

In stock market terms the O'Reilly name is magic. Institutional investors see the chairman as a visionary in a global market. It was he who originally decided to take the Indo to the world. In the light of last week's frenzied changes in the global media is anyone better equipped to plan the next move?

And the next move is already in motion. On Tuesday the Group announced that iTouch International, the mobile information service provider in which it has a 70 per cent holding, will be floated this year.

Last October iTouch joined with Vodafone Airtouch to offer mobile phone users news and information services, short message service delivery, billing facilities and voice-based products. An initial 25 per cent IPO could yield around $125m for the Group. Independent News and Media is already a player in the world of mobile commerce. The market seems to recognise this.

On Wednesday the Group bought service provider, Internet Ireland. It plans to spend at least £12m launching a new internet platform for the domestic Irish market. The Group has already targeted `new media' opportunities in both fixed line and mobile telephony, internet and e-commerce.

The global media sector is buzzing. Last week the biggest ever media merger was announced when America Online took over Times Warner. The Indo is today pivotally placed to take advantage of the `new media' drama being played out on the world stage, where internet companies are set to absorb traditional newspaper groups. A series of new alliances will be formed as the industry is turned upside down.

Enter Tony O'Reilly; bang on cue, just as the new media revolution begins to roll. In one hand he holds iTouch, the global mobile information service provider; in the other he grasps Internet Ireland, the last stand alone Irish internet service provider. And not a muzzle in sight.

Eircom in a bind

EIRCOM needs a Denis O'Brien. Last week Eircom looked hopelessly flat-footed. O'Brien had eloped with BT, the chosen bride of Alfie Kane, Eircom's Chief Executive. So where does O'Brien's coup leave you and me Eircom's small shareholders? Should we hold on?

BT's removal from the battlefield as a possible predator is a short-term minus; yet they have paid top dollar for Esat a real plus. The Irish mobile market in which Eircom is the lead player must be more valuable than we thought. Good news for Eircom shareholders, if a big telecoms player is ready to buy us out.

On Thursday Eircom made a spirited response, bidding for one of the third generation mobile licences in the UK. If the Brits can invade Eircom's patch in Ireland they are going to show the flag in enemy (UK) territory. Eircom are tarting themselves up for the next suitor.

The bid for one of five UK mobile licences may not be of much significance in itself. But success will probably force Eircom into an alliance with a large global telecoms player. In those circumstances a takeover of Eircom becomes a logical consequence. A global company could simply mop up Eircom on its way into the British mobiles market.

Today Eircom is wounded. Yet companies with weak management can be the most vulnerable. A strong executive team with a determination to cut costs to the bone could be installed by an aggressive buyer. There's no need for shareholder panic. Sitting ducks nearly always get shot in the end.

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