Takeover talk spoils the party
With the ITV strike out of the way and a poor performance over winter now behind it, 1969 was the year Thames began to look ahead.
With colour promised for later in the year, the company’s management could settle down and start building up to a truly brand new type of television for London.
At that point, fate intervened. The Associated British Picture Corporation, owners of a cinema chain, film production assets and ABC Television, the 51% owner of Thames, received notification of a takeover bid.
ABPC had been a large player in the cinema world when the cinema had been the nation’s universal choice of entertainment.
But television had started to eat away at the audiences early on. British films, once so popular, began to fade as Hollywood started to develop the “blockbuster” movie.
ABPC diversified, first into television with ABC Weekend, then into converting disused cinemas into bowling alleys – a fad that has often looked like taking off in the UK but never quite managed it.
ABC Weekend was soon in profit and the company started to live off the earnings. Cinema attendances and bowling alleys stopped concerning them and they started to see themselves as a property company. In short, they grew complacent and became ripe for the picking.
Electrical and Musical Industries – EMI – had been a relatively successful record company with a history stretching back as far as ABPC’s.
But the 1960s had seen a massive boom in the sales of records – partially led by one of EMI’s better signings, a Liverpool group known as The Beatles.
Suddenly EMI was rolling in money. This money had to be spent somewhere – it couldn’t just be taken home in wheelbarrows.
So EMI started to look for ways to expand. The best way to expand in the 1960s was to buy a large but complacent business in the field you wanted to get into, exciting the City with plans to revitalise the management (rather than asset strip and sell on, as now).
EMI started by buying the Grade family’s businesses, getting it access to the top live talent in the UK.
Now it needed to do something with that talent. It would need a company that could make films. Or a company that would make television. Or both, ideally.
ATV in Birmingham would be one option. With a close relationship with the Grades, EMI could have swooped. But Lew and Bernard weren’t the easiest people to get on with already. Bring ATV in and you get an even closer relationship with people who like to dominate a room. Besides, ATV’s parent company, later to be named Associated Communications Corporation, wasn’t for sale and wasn’t suffering from complacency.
The Rank Organisation had television, cinemas and film making to hand – but Rank was too big an organisation to swallow.
ABPC, however, was the Goldilocks scenario – “just about right”. The board level management were close to retirement; the company wasn’t being dynamic so had potential; and the Thames investment was very tasty. Best of all, EMI had already picked up 25% of ABPC when Warner Bros decided to leave the UK market on the death of Jack Warner.
But the Thames investment was the stumbling block. The ITA had no view on the sale of ABPC to EMI, but it certainly did have a view on allowing the Grade empire to come into contact with Thames.
In Howard Thomas’s engaging autobiography With An Independent Air, he recalls meeting with Lew Grade to discuss ITV matters taking a creepy turn as the EMI-ABPC takeover got underway.
Lew, cigar in one hand and an unpaid invoice in the other, took pleasure in dropping broad hints to Thomas on how the business of ITV would be made simpler when Thames was part of the Grade Organisation and ATV.
Whilst Thomas doesn’t admit to ratting on Lew to the ITA, it’s likely that within days of Lew first mentioning that his brother Bernard would become chairman of ABPC (later EMI Films), the Thames MD was telling all to the Authority.
The ITA moved quickly, based on a set of worst-case assumptions that would undermine the nature of ITV and the control of the Authority itself:
- Thames controlled by, jointly planned with or considered part of a joint undertaking including ATV, ACC, Lew or Leslie Grade or Bernard Delfont could not be allowed to happen.
- Any change in the shareholding of Thames that allowed Rediffusion or BET to gain more than their allotted 49% of Thames could not be allowed to happen.
- Any change in control of Thames that would allow another organisation of any sort to change the management and policy of Thames could not be allowed to happen.
These conditions were told to ABPC in early 1969, so that the takeover could proceed with them in mind.
The ITA helpfully presented three options.
- EMI could retain the 51% of Thames, but would have to sell the Grade companies and disassociate itself from the Grade family.
- Rediffusion could be allowed to buy the shares, assuming that they agreed in advance with the ITA that they would not alter the board, management or policy of the company – in effect, own but continue not to control.
- ABPC could be forced to sell 2 of the 51% it held in Thames before the merger to a third party agreed by the ITA, who would either be required to keep hold of “the casting vote” or to sell it on only to someone agreed with the ITA.
In practice, none of these options was really viable on the open market. But the ITA had thrown enough obstacles in the way of EMI gaining control of ABPC to ensure that they would have a voice in the actual takeover.
When the takeover went through in mid-1969, both Fraser at the ITA and Howard Thomas at Thames would claim the credit for the compromise that allowed ABPC to fall to EMI.
The 51% of Thames owned by ABPC was hived off into a new company, Thames Television Holdings Ltd. This was then put at arms length of EMI, left to run its own affairs with Lord Shawcross at the head of an independently-minded board.
Thus EMI got the Thames profit share it wanted; the control of Thames stayed with Thames as the ITA wanted; and Lew Grade had no way to get his sticky mitts on a neighbouring company.
The ultimate idea was for Thames Television Holdings to be floated on the stock exchanged or otherwise dispersed, mainly to prevent Bernard Delfont, now in the chairman’s shoes at ABPC, from exerting any pressure on Thames.
However, with no sign of this pressure or of any change of policy at Thames, the ITA was happy to ignore the problem.
It would be 1971 before Thames Television Holdings was floated, at the ITA’s eventual insistence, with 60% of the voting shares being sold off – 23.5% to the City, 23.5% to big investors, 13% to Thames management.
The future of Thames was finally settled in mid-1971 – the best part of 3 years since they came on air.
Everything was decided for the best, but the company had now lived through the distraction of its senior management and board, strikes, lean periods, the near-fall of LWT and another prolonged Tory recession.
Finally, Howard Thomas could get to work on building Thames (in colour) into something great. Thames was already good and important and liked by the viewers – but Thomas required his works to be special, not just good. He was ready for battle.