A tweet by a former colleague got me thinking about how markets could provide a solution to the many problems facing the BBC currently.
BT should merge with the BBC. Discuss.
— Pete Swabey (@peteswabey) November 21, 2012
The BBC, as most will know, has come under fire over its handling of a number of issues over the past couple of months, with scandals appearing on an almost daily basis.
Some politicians on the right would prefer to see many changes at the tax-payer funded broadcaster, which has been long accused of bias. Indeed, scrapping the license fee would be a tangible tax break that MPs could easily sell to constituents.
One way they could approach this is by seeking out a merger with telecommunications giant BT, a former state-owned company.
Clearly, there would be advantages and synergies from a merger of the two.
BT has recently begun to make greater strides into the world of content provision, having successfully bid for a package of Premier League football games. The BBC, in its turn, has been making inroads into the online world, where broadband provider BT reigns.
The government would, of course, pocket any sell-off of the BBC or subsidiaries.
It could also help stimulate markets, which have seen a lack of M&A activity since the onset of the credit crisis.
BT is used to working closely with the government. As a utilities company, BT has been responsible for operating and developing much of the infrastructure required for modern telecommunications.
There could be positive on a governance level, also.
BT – a FTSE 100-listed company – will feature in many UK investors’ portfolios around the country, already.
Indeed, it is a top ten holding in Neil Woodford’s £9.1bn Invesco Perpetual Income and £12bn Invesco Perpetual High Income funds, Adrian Frost’s £4.5bn Artemis Income and Tinneke Frikee’s £2.2bn Newton Higher Income funds, among others (to download a full list, click here).
Therefore, a merged BBC/BT entity would remain in quasi-public ownership, whose chief executive would be accountable to shareholders.
It wouldn’t be the first time that the company has been linked to the takeover of a broadcaster, having previously been linked with Channel 4.
But the BBC is a much-loved institution in the UK. Any government who thought about making such radical changes would certainly be brave. However, as past privatisation has shown, sometimes politicians are prepared to sell off the family silver. The question of whether BT would be willing and able to take on the BBC as a whole or in part remains. It would also require a lot of cash.