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Mergers and Acquisitions Media Rupert Murdoch

Why the Bollorés' Vivendi-Havas merger has echoes of another media dealmaking dynasty

By Tony Walford, Founder



Opinion article

May 15, 2017 | 8 min read

Two media dynasties. One selling, one wants to buy. The reasons for them doing so are broadly similar (consolidation and the ability to compete in global markets – of which more later), but the outcomes may be different.


First of all, last week's news that Vivendi, the media giant which owns Universal film studios and Universal Music, as well as TV stations like Canal+, is buying a 60% of marcomms group Havas (owner of Victors & Spoils, FullSix, Arena, Arnold, H4B, Work Club and many others across the globe) for €9.25 a share. This values the deal at over €2.3bn and the whole of Havas at €3.9bn, an 8.8% premium over the value of the shares at the close of trading on Thursday, when news broke.

Vincent Bolloré, whose family firm Bolloré Group owned the stake, might not be as high a profile figure as his rivals Sir Martin Sorrell and Maurice Lévy, but he’s no less astute – he’s done a good deal here: the premium is 20.6% over the average Havas share price for the last 12 months, according to sources.

This is the second major advertising transaction in which he’s has been involved in recent years; he sold his 26% stake in Aegis Group for a significant profit when Japanese ad behemoth Dentsu bought it in 2012.

Bolloré’s son, Yannick, took over the reins of the Havas group last year and caused a stir when he merged the network’s creative and media departments, leading to the departure of several high level executives.

Havas said part of the motivation for a sale is that it is "threatened by increasing competition from companies coming from other sectors" and maintained Vivendi "wishes to preserve jobs". Compared to the ‘big five’ – WPP, Publicis, IPG, Omnicom and Dentsu-Aegis – Havas was something of a minnow and was always in danger of being taken over, probably by a hostile bidder. It also lacked the scale that many global brands demand these days.

So the deal wouldn’t have particularly surprised anyone. An acquisition of Havas has been rumoured for years (and Bolloré pere is chairman of Vivendi).

Havas said in a statement released after the French stock markets closed: "If Vivendi's offer is accepted, Vivendi would enter a new phase of development to accelerate its building of a leading world-class content, media and communications group and will ensure the newly created group a unique positioning in an environment in which content, distribution and communications are converging.

"If this transaction is successful, it would enable Havas to leverage Vivendi's skills in talent management, content creation and distribution. In return, Vivendi will gain access to Havas's expertise in consumer science, data analytics and new creative formats."

The statement continued: "Vivendi wishes to preserve jobs and to allow Havas to develop its business in an industry which is undergoing rapid consolidation and is threatened by increasing competition from companies coming from other sectors."

So now Vivendi has another string to its bow, and Havas has some measure of protection from hostile bidders. Plus there are potentially interesting synergies by marrying up the ad group with Universal and Canal+ and, by disposing of its advertising group, the Bollorés are considerably richer.

If the Bollorés have an equivalent in the Anglophone world, it’s the Murdoch dynasty. Some 60 years ago young Rupert took over a small newspaper business from his famous dad, Sir Keith Murdoch, and transformed it into the world’s best-known media empire, encompassing everything from TV, movies and books to radio, newspapers and digital properties.

At 85 and showing no sign of slowing down, Rupert is perhaps the media world’s most famous, aggressive and astute dealmaker. His swoops for the WSJ, for full control of the Fox network, and for his daughter Elisabeth’s TV production company Shine, are the stuff of legend (so is his acquisition of MySpace, though not for entirely positive reasons).

Apart from the Sun newspaper, it’s always said that old Rupe’s favourite company is Sky. Of all his possessions, it’s closest to his heart after the “Currant Bun”. Back in the late 1980s, he bet his entire company on it, and in doing so not only created a pay TV giant, and a world-renowned brand at the cutting edge of technology, but also revolutionised broadcasting in in Britain and changed football forever (enriching it in the process and, some say, also ruining it).

The problem is that Rupert doesn’t own all of it. And Rupert likes to own things. Although the Murdoch dynasty is the biggest shareholder, at just under 40%, it’s not enough. Back in 2011, he made, via what was then known as News International, a bid for the rest of the company. It was a generous offer, and might well have gone through had it not been for the phone-hacking scandal.

This led to the bid being withdrawn, Rupert’s son James standing down as chairman of both Sky and News international, and a slap on the wrist from regulator Ofcom.

After a complete restructure of the company (the newspaper assets were spun off and the broadcast part of News international was renamed 21st Century Fox), Rupert and James returned with a new bid at the end of last year – £11.7bn. It was an offer too good for most shareholders to refuse, and last month even received the nod from the EU regulators in Brussels.

However the bid has again been derailed – first by next month’s general election, which has forced Ofcom to delay its consideration until after a new government is formed, and then by another scandal, this time enveloping senior executives and the top presenter at Fox.

Because the allegations involve accusations of sexual and racial harassment, they could potentially influence Ofcom’s judgement as to whether Fox is a “fit and proper” owner of a UK broadcaster. Ofcom also has to consider whether a takeover would harm media plurality.

On the latter, I think Ofcom will be comfortable. Although the biggest player in the pay-TV space, Sky is no longer completely dominant and faces powerful competition from BT, Liberty Media (which owns Virgin) and others.

On the other matter, that’s more difficult to call. The allegations swirling round Fox show no sign of abating and, while in theory they have nothing to do with Fox’s ability to run Sky, they are politically toxic if Ofcom is seen to rubber-stamp the deal too easily.

However, unless the Fox scandal turns unbelievably rancid, I think the deal will go though eventually; Rupert Murdoch and his (other) son Lachlan – who’s co-executive chairman with his father – were certainly bullish about it last week.

If the deal doesn’t go through, though, I suspect Murdoch will be devastated. Unlike Vincent Bolloré, who seems to be content to acquire wealth by selling off properties, Murdoch senior uses it to gain power and more media properties.

Vincent, despite having spent years building up his empire, is happy to sell it off. Rupert wants to consolidate his domain and is unlikely to ever let go.

He probably knows that his beloved Sun has a limited shelf life, but a 100% Murdoch (or Fox) owned Sky would be something to leave to his children and grandchildren. This would be an ideal way of keeping the dynasty going, to retain media dominance in the country that made his fortune and over his old nemesis, the BBC, as well as newer foes such as BT, Viacom and Liberty Media.

So, the Bollorés and the Murdochs: two very different dynasties with similar dynamics. One a seller, the other a buyer.

Tony Walford is a partner at Green Square, corporate finance advisors to the media and marketing sector

Mergers and Acquisitions Media Rupert Murdoch

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