BT Broadcasting: cock-up or conspiracy..?

April 2002 

If you are still staring at your Barclaycard account and wondering how your Christmas could ever have been that Merry, and how your New Year could ever be Prosperous enough to catch up in time for the next battering, then spare a thought for another Barclay, also by repute a bit of a card, but this one is called Barclay Knapp, the American CEO of stressed cable operator NTL.

In case you need proof that he is of the “former colonial” persuasion, check out his words: “ We expect the result of that recapitalization process to give us further liquidity to reach the ultimate goal of free cash flow positive which is slated for 2004.”

Mr Knapp has also been testing his credit limit, and the news that NTL is trying to restructure £12bn of debt has been leaking out for a long time now. But that doesn’t make the task any less daunting.

Nevertheless, NTL has a wonderful asset, in that it provides a must-have service (TV and phone) to people who are continually paying their bills; but clearly not yet enough.

Now, during January, the Chairman of BT, Sir Christopher Bland launched a surprise announcement in the Sunday Times to the effect that BT should become a broadcaster and take on the cable companies at their own game. In other words, since NTL can deliver both TV and telephone services, so should BT.

And not only was this reported on the front page of the Sunday Times, there was a personal column on the back page on the same subject, by you guessed, Sir Christopher Bland. A certain amount surprise ensued as every scribbler in the City expressed an opinion on this idea, and then Sir Christopher gradually wound back down from total commitment to imply he was merely “thinking aloud”.

But the fact remains that BT’s network will not provide a viable broadcast environment for a long time yet, and it can only serve about 10% of the network, due to the physical factors that prevent mass DSL deployment. So why did Sir CB do it..?  There is a wonderful conspiracy theory story that I must relate to you all, in case you want to believe that the various parties to the plot are smarter than they generally seem.

It goes like this: the phone rings at BT HQ in early January, and Sir Christopher answers to hear the gruff antipodean tones of Rupert Murdoch, the grand fromage of News International – owner of a large lump of Sky TV and the Sunday Times.:

“Murdoch here. I have a proposition for you”

“Eh, what’s that old boy..?”

“Simple – you put out a story that BT is thinking of delivering TV on your ancient copper network.”

“What on earth for?”

“Wake up you daft pom – NTL is deep in the dunny. It won’t take a lot to get the City sharks from fixing it for good – and then you and I can divvy it all up…”

“…er… dunny..?

“Crapper, shithouse you daft bugger – anyway that’s not important – the import thing is that I want Sky to supply the broadcast TV to the NTL customers, and you can snatch the telephone deal back – and maybe even deliver some video on demand to the 387 homes you’ve got connected to enough bandwidth [fnar…fnar]. So I’ll cut a deal.”

“Oh really..? But what has all got to do with NTL being in a toilet?”

“Do I have to spell this out to you..?”

“That would probably be best…”

“[sigh] OK then, here goes: NTL has a big financial problem coming up…”

“What even bigger than BT’s..? And I thought our debt was pretty impressive.”

“Well, it might not be quite as big as yours, but it’s getting bigger and it has a much smaller cash flow to hide behind than you lucky bastards have got.”

“Gracious me. Go on…”

“So if you sell the idea to the press that BT might be thinking – maybe – about delivering TV along your ancient cables – you know the City press – they’re a pretty gullible lot, thank God – they will put two and two together and come up six and bit – and then write down the prospects of NTL and speed up the crisis. And we can grab the TV service delivery with Sky. We’re going to do it anyway – but this’ll just help NTL out of its misery a bit faster.”

“I say, Rupert, what a wheeze… err – you couldn’t fix me a cut price sub to Sky Sports  could you..?”

“…click….brrrrrrrrrrrrr…..”

This conversation of course never happened. But aren’t conspiracy theories always so much more exciting than the truth, which appears to be that Sir Christopher felt like testing the reaction of the press to a proposition that he was subsequently advised BT couldn’t possibly deliver.

But since a combination of their own foolishness and the government’s 3G licence fees has bled most telcos to death, there is no white knight on the horizon for NTL – so wouldn’t it be wonderfully ironic if the government finds itself required to step into the NTL situation and ask BT to take on responsibility for the NTL telecom customers, and Sky to look after the TV…?

Whatever else, NTL customers are also voters, and no government would dare try and explain that the absence of phones and TV in their homes was due to “market forces”.

Not even this one...