Vertical integration the industrial logic for M&A: Vivendi / SFR and Comcast / NBC Universal
This article was published in January 2011 and reflects the regulatory position at that time. For current guidance on this topic, contact Bratby Law or see our latest insights.
My eye was caught last night by a story in the Financial Times this morning reporting analyst speculation that in the wake of the approvals of the US Federal Communications Commission and Department of Justice for the purchase of 51% of NBC Universal by Comcast, which in turn enabled Vivendi to complete its exit from NBC Universal, that Vivendi would make an offer to buy Vodafone‘s 44% stake in the French telecoms operator SFR.
What intrigued me was the logic for both deals – the vertical integration between content provision (NBC Universal and Canal+) and distribution networks (Comcast and SFR), and the consequential ability to provide bundled consumer offers. In the UK, this logic also underpinned Sky’s entry into the broadband and telephony market. Following launch it will be interesting to see how the YouView customer proposition stacks up against triple play offers of Virgin Media and Sky.
Merger rationales very seem to come in and out of fashion – and this logic seems to currently be very much in vogue. Personally, I’ll be intrigued to spot the CEO who decides to espouse the contrary view of focus, and see how the market reacts.
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