Monday, 7 October 2013
Royal Mail now...BBC next?
Royal Mail has a strongly unionised workforce and a commitment to the Government to maintain unaffordable business like universal delivery. So to sell the idea, they price it cheap, don't account for land values and let this slip pre-IPO as well as taking on the pension liabilities for the taxpayer. It's a good story for investors today and if you trade the share there is a good chance of making a nice 15%-30% upside. Long-term, a dog is a dog, the world is not going back to sending hand-written letters and nor will people always send real Christmas cards which is a significant chunk of the business.
However now that this taboo is broke ,we know there will also be public offers for Lloyds in Q1 of next year and possibly for RBS too. Merrily, a slate of privatisations. This leaves one commercial monster out there for the Government, the BBC. This would be the holy grail as the BBC is after all a very good business with a market share that won't easily be attacked by the competition and some very strong content and services, like its website, that should prevail even in a competitive market. Plus, subscribers, that is everyone, can be given shares for free on account of them building up the business.
If these privatisations prove popular in the short-term then this should be in the manifesto's of UKIP and the Conservatives for the next term of Parliament. It's for the BBC to work out how it copes with the end of state-enforced revenue-raising, but I have a feeling that a giant endowment from the sell-off will go a long way to easing the blow.