Two mergers, one industry, different media profiles?
22 Jan 2016 3:49 am by Leela Bozonelis
Early 2015 was a newsworthy time for the telecommunications sector in the UK. On 23rd January 2015, Hutchinson Whampoa (the owner of the Three network and brand in the UK) announced plans to buy the O2 network from Telefonica.
Less than two weeks later, BT went public with its desire to get its hands on EE, the largest mobile phone company in the UK market. Poor Vodafone, the only remaining network operator not involved in takeover talks, must have felt like a jilted bride.
Of course the media covered both stories extensively, particularly with one announcement coming so quickly on the back of another. With the potential of competition approval both at local and European Union level, consolidation in a competitive market and billion pound price tags, the business press had the makings of an engaging story.
Two mergers. A similar level of media interest
Initial media interest in each merger (or acquisition if you prefer) was remarkably similar. The Three/O2 announcement came on 23rd January 2015 and a search of LexisNexis' Nexis database of trusted media sources from 21st to 31st January (to include initial story hype and inevitable analysis in the week after) shows that there were 106 newspaper stories containing EE and O2 alongside either the words "merger" or "acquisition" in that time frame. Changing the date from 2nd to 12th February and replacing the words EE with O2 and BT with Three brings up a similar appetite within the press, culminating in 116 stories. On the face of it, this is a model of media consistency, suggesting that the press treated both stories with a similar level of importance.
The ongoing newsworthy story
Yet across the rest of the year, despite arguably being the less fashionable story, the O2/Three story continued to generate column inches, often far more than the BT/EE story. A simple explanation for this was the ongoing debate around whether this particular merger should be referred to the European Union.
This was most stark in last six months of 2015 as you can see from the chart below. The BT/EE merger generated about half the number of UK news articles that were written about O2/Three. This was most stark in November when the O2/Three merger generated more than 900 articles, primarily on the back of being referred to the EU, in comparison to the BT/EE merger which generated only 400 articles, many of which were passing mentions to explain why one deal had been referred and one had not. As questions were asked over the likelihood of an EU referral and news of the referral itself broke, scepticism about the likelihood of the deal taking place and the implications of this became routine business news fodder.
Of course, once the BT/EE was confirmed on 15th January, a slew of new stories appeared. But surprisingly O2 and Three continued to register more interest in the media than BT/EE. Indeed even on the day that the BT/EE deal was cleared, the O2/Three story generated more media interest.
Managing the story
What does this tell us? First something about the unpredictability of media profile on companies and mergers. It is unlikely that two such similar deals will ever take place so close to each other in one sector of one country again. Whilst initial media profile was remarkably similar, the Three/O2 story rumbled along all year.
Secondly, it is important to continue to monitor the media even after an initial story has broken. Companies with an interest in the O2/Three merger (such as suppliers or corporate customers) would have gained significant insight into the ongoing saga of EU competition referrals by adopting a constant media monitoring approach.
Finally, hats off to BT/EE. Throughout the media coverage in 2015, the two companies' profiles continued to peak and trough in a remarkably similar way. In fact looking at the chart for the early part of January 2016 above, the two companies' media profile follows an identical path. This suggests a co-ordinated approach to media management has clearly been identified and implemented from before the final approval of the merger. Delivering a consistent message to the outside world, via the media, pays dividends at any time, particularly in the uncertainty of a merger or acquisition.
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