James Murdoch for Sky TV and Richard Branson of Virgin Media continue to slug it out. Both companies have a capacity to damage the other’s competitive position. As a complete victory for one side seems unlikely, the organizations will have to find ways of co-existing and collaborating, as well of competing.
The wider battle was explored by Jeremy Warner for The Independent in February.
It can be traced to the formation in April 2006 of Virgin Media, from the ailing NTL cable company. The move was presented as one which would offer a bundle of services to users. It brought the new company into more direct competition with Sky. Competition in this emerging multi-media context is intricately mixed up with inter-dependence, as services are shared and traded. Sky promptly acquiring a minority stake in ITV. This was seen as a protective strike, as ITV was a take-over target for the newly formed Virgin Media.
It is this move which led to complaints against Sky, and to the decision this week by Secretary of State Alistair Darling to refer the issue to the Competition Commission.
In the last few months the dispute became serious when Sky and Virgin Media failed to resolve a dispute over re-negotiated charges requested by Sky. Customers of Virgin Media were deprived of the disputed bundle of Sky programmes previously accessed through the former NTL cable service.
It is tempting to portray the dispute as a battle between Richard Branson of Virgin Media and James Murdoch of Sky. We can predict Murdoch junior’s actions to some degree. He is unlikely to present himself as anything but the son of superdad Rupert. So tough and mean is likely to be the order of the day. Branson will continue to find ways of representing himself as a benign socially-caring figure.
Meanwhile, the dispute is a bit of a no-brainer. There’s evidence that the combatants have blundered into a messy situation which can turn out badly for all concerned. Corporate attention may be distracted from issues of running creative media organizations to political and legal efforts.
What happens next?
The least violent outcome is a period of increasing lack of progress, followed by some resolution, togther with a bit of cosmetic face-work for the weary warriors. There may even be some creative initiative accompanying restoration of Sky channels for Virgin Media subscribers.
More catastrophic solutions might include a regime change. But recent military history reminds us of the dangers of such a policy. Time-scale for significant developments? Weeks would be possible but unlikely. Months would be unfortunate, and not beyond the bounds of probability. But cash haemorrhaging is a condition which brings even the strongest of egos into line.