I say ……
This is an interesting article indeed and my take on it is that David Abraham is a wise man indeed.
• Integrating two businesses successfully requires a level of focus and effort which most companies tend to underestimate, hence the high percentage of failures when it comes to creating value out of an acquisition of a merger.
• As an industry, the whole world of radio and television are going through challenging times, with a need to re-define their strategy, their target audiences, and the way they will convey the content of their programmes to their audience. They need to re-invent themselves, the solution to their current difficulties and uncertainty does not lie in simply reducing their cost base by deriving possible synergies from a merger or acquisition : size is no guarantee of success and therefore it is difficult to see what Channel 4 would gain from acquiring Five which would only add to the shopping-list of strategic and organisational issues David Abraham needs to address.
• Evidently RTL must be disappointed at David Abraham’s lack of macho-ego and appetite for “acquisitions for the sake of acquisitions” as Mr Abraham’s wisdom has ended (or certainly postponed) the prospect of disposing of a problem child in their portfolio. Maybe they should have attracted Mr Abraham to lead RTL rather than let him move on to Channel Four !
• I still think M&A is a fantastic means of achieving a quantum leap in the development of a business, but only when the business case rests on sound reasoning; not for the ego of the CEO, not just to enjoy the thrill of all the media buzz, not so simply become bigger (and more complex), but to create value and gain a durable competitive advantage. All things that David Abraham seems to have understood. So we can be sure that the day David Abraham makes a bid to acquire another company, there will be some real substance in his proposition and that is the sort of M&A I would love to get involved with, as an expert in post-acquisition business integration.
They say ….. (source: Media Week 7th July 2010)
'Merger with Five is not on the agenda', says C4 chief executive David Abraham
The 46-year-old former adman, who took the reins at Channel 4 in May, has ruled out any immediate tie-up between the two broadcasters. Abraham said: "A merger with Five, or anyone else, is certainly not on my immediate agenda for the future of Channel 4. There are many other things I want to look at – we need to invest in commercial innovation. It's a challenging but exciting time."
[…] Abraham's comments will be sure to disappoint Five's owner RTL, following speculation the two broadcasters had already held cursory meetings, involving both Abraham and Channel 4 chairman Lord Burns. Five's future, led by chief executive Dawn Airey, is far from certain, with RTL still actively looking for a buyer. At just 13-years-old, the terrestrial broadcaster has had its value slashed by more than half after RTL reported losses of £37m for the recession hit 2009. In January 2009, regulator Ofcom recommended that C4 merge with either Five or BBC Worldwide to provide an alternative national public sector broadcaster.
The path for any potential deal was further encouraged in Lord Carter’s Digital Britain report, and RTL chief executive, Gerhard Zeiler, has made it clear he sees the benefits of such a merger. It had been unclear, until now, if Channel 4’s new management would be open to a deal.
Abraham, speaking publicly at the annual ISBA lunch, said: "Both myself and the new Channel 4 chairman Lord Burns are clear that in these straitened times Channel 4 needs to focus on helping itself. "We are not scanning the horizon for the cavalry."