Stagecoach buyout could mark the end of a profitable era for bus and train tycoons | Diligence
IIt is proof of their declining empires that the proposed merger of Stagecoach and National Express, the UK’s largest rail and bus operators not so long ago, will not unduly disturb the authority of competition.
Stagecoach, which a decade ago sought to swallow up National Express, is now on the verge of being subsumed by its rival. The turnaround in his fortunes was influenced by foreign companies, and the pandemic has amplified all of his problems. But the course of the company has notably followed the arc of privatized public transport in Great Britain.
Launched as a fledgling bus operator in 1980, Sir Brian Souter’s Stagecoach took advantage of the wave of opportunities that arose after Thatcher deregulated the bus industry in 1986. He became a player. dominant in many regional markets, where handpicked routes have allowed it to operate at good margins – to the growing concern of customers and local communities.
After rail privatization, Stagecoach was the first operator to open a service – then partnered with Sir Richard Branson to run Virgin Trains, one of the great examples of the new regime: arguably improving customer service, the innovation and passenger numbers – and undoubtedly reaping huge dividends from the West Coast Mainline.
With rail seemingly inexorably growing, the Scottish operator took a 90% stake in a new company Virgin to win and manage the East Coast rail franchise in 2015, a long-standing price target that has seen its value peak. . But it turned out to be a disastrous miscalculation: Stagecoach pulled the plug as losses increased, and the line returned to state control again.
National Express, of course, had been there before: outbidding to run the franchise and being forced to hand over the keys in 2009, when it looked like the company could fall prey to Souter. Perhaps he was lucky to see the warning signs earlier and focus on expanding overseas instead. He left the British Railroad with the sale of C2C in 2017 – and in the boardroom, flogging the franchise to Italians was quickly considered one of the best deals ever.
In its local bus operation, National Express also seemed to be operating increasingly on grain. When transport authorities and politicians in Newcastle and Manchester pressed for reforms to curb the ‘wild west’ in which bus companies thrived, Souter threatened to ‘drink poison’ rather than sign deals. But calls for regulation were absent in the West Midlands, where National Express dominates; partly because of the mayor’s policy, but also because of the company’s cultural acceptance of the kind of partnership with local authorities that Stagecoach has been wary of, if not actively opposed to.
Either way, the two are now indebted to the state, which has guaranteed lost revenue in bus operations since the pandemic took passengers away. Rail, meanwhile, was effectively nationalized due to the coronavirus – no doubt deciding the franchise had become untenable.
With Souter on the move for some time – resigning as chairman two years ago and starting to sell his stake – the time may have come if Stagecoach’s name becomes a story. His campaign in Scotland to retain the Article 28 clause that prevented teachers from “promoting homosexuality” still made the brand toxic to many, no matter how many rainbow buses Stagecoach has since launched. .
Stagecoach’s plummeting value means Souter’s wealth, as well as that of his sister and Stagecoach co-founder Ann Gloag, is now only “just Â£ 650million”, according to the Sunday opening hours rich list – with some Â£ 100million distributed over the years in charitable donations, many to be thankful for. Passengers, who have seen rail fares soar and local bus services wither, may also hope this marks the end of a chapter where a few could benefit immensely from an essential public service.
Netflix and giant Roald Dahl deal ring a compelling story
A Roald Dahl book is sold somewhere in the world every 2.6 seconds, a statistic that is not lost on Netflix, the new owner of the late author’s work. Content is king in the battle for global streaming supremacy. Franchises that are guaranteed to be a hit with viewers are becoming increasingly sought after, rare and valuable – Netflix spent $ 1 billion on a licensing and production deal with Dahl’s estate in 2018 before increasing setting out to buy the catalog back last week.
Netflix is ââhoping the author’s print popularity matches its global content machine perfectly. Dahl has worldwide popularity, with 300 million copies sold in 63 languages ââto date, and although some of his classics, such as James and the giant peach and Charlie and the chocolate factory, were written as early as the 1960s, the storytelling has remained timeless.
While competing streaming services have challenged Netflix’s dominance, many of its biggest hits, including Marvel movies, faded as their rights holders regained control of their best assets. Netflix is âânow forced to build its own content empire through major deals with top talent, Grey’s Anatomy creator Shonda Rhimes to films starring stars such as Ryan Reynolds.
Beginning in the mid-2000s, Disney spent $ 15 billion to complete its stable of classic family hits by purchasing Pixar, the Marvel Universe of Superheroes, and the Star wars-manufacturer Lucasfilm. Then another $ 66 billion on Rupert Murdoch’s Fox Empire, including content from The simpsons To Avatar. Meanwhile, Amazon spent $ 1 billion to bring JRR Tolkien the Lord of the Rings to the small screen, while HBO Max has worldwide successes of Friends to DC Comics franchises.
Netflix spends $ 17 billion a year trying to create must-see TV shows and movies, many of which flow without a trace. With that in mind, paying around Â£ 500million for Dahl’s proven treasure seems like a bargain.
Westminster reshuffle could give gambling companies a losing hand
While the $ 22.4 billion (Â£ 16.4 billion) offer for Ladbrokes owner Entain was the most eye-catching development in the gaming world last week, bigger machinations were taking place in Westminster .
The UK government is in the midst of a review that could completely reshape the legislative landscape governing the world’s largest regulated gaming market. It was already a small-scale bet that the gaming logos on soccer jerseys were for the chop. People familiar with drafts of a white paper expected before year-end now suggest it’s anything but done.
More may be to come. A reshuffle put new staff in charge of finalizing the gambling review, with Nadine Dorries replacing Oliver Dowden as culture secretary. Dorries has not been outspoken about the game, but his ally – Conservative commentator Tim Montgomerie – has often expressed his distaste for the industry.
Also significant is John Whittingdale’s departure as a junior minister with direct responsibility for the review. Whittingdale had been viewed as gentle on the game, having once downplayed the dangers of Fixed Odds Betting Terminals (FOBT), roulette machines that were later called a “social evil” by his own government. His successor as Minister of Gaming, Chris Philp, wholeheartedly supported reducing the maximum bet on FOBT from Â£ 100 to Â£ 2.
If football sponsorship is up for debate, Philp and Dorries may well consult Tracey Crouch, who runs a game review. The former Sports Minister was the architect of the FOBT Cup and will be keen on funding the game for football. but also to its saturation. The political stars, it seems, are lining up.
The danger for gambling reformers is that ministers will focus on soccer jerseys at the expense of less sweeping reforms, such as lowering the stakes of online slots or accessibility checks to prevent bettors from slipping into financial ruin.
The danger for gambling companies is that Westminster is now reporting on football shirts, as it has something much more ambitious up its sleeve to surprise and delight the multi-party coalition hungry for tighter regulation. The roulette wheel is spinning.