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Hershey, Ferrero Consider Cadbury Bid

Posted by: Kerry Capell on November 18

A bidding war looks set to ensue for British confectionary maker Cadbury (CBY) after U.S. chocolatier Hershey (HSY) and Italian confectioner Ferrero issued separate statements confirming their interest in the company. After rejecting an initial $16.7 billion offer in September, Cadbury dismissed Kraft's latest proposal of $16 billion on Nov. 9 as "derisory."

Strategically, the three-way tie-up makes sense. Hershey, which already owns the license to produce Cadbury chocolates in the U.S., would gain access to faster growing emerging markets. The U.S. company also would get a foothold into the non-chocolate confectionary market through Cadbury's gum brands and Ferrero's ownership of Tic-Tacs. And Ferrero, whose sales are now focused on the Italian, German, and French markets, would get much greater global exposure.

Culturally, the three companies share similar values. Cadbury has a long heritage as a socially responsible employer. That's a focus Cadbury has tried to embed in its brands, such as premium organic chocolate maker Green & Black's. A big proponent of ethical sourcing, Cadbury has pledged that 25% of its Cadbury Dairy Milk global sales and 350 million Cadbury Dairy Milk bars will be Fairtrade certified in 2010.

Continue reading "Hershey, Ferrero Consider Cadbury Bid"

Fox Film Chief Sees Avatar Leading 3D Boom

Posted by: Jack Ewing on November 12

Avatar, the fabulously expensive 3D sci-fi flick opening Dec. 18, may presage the future in more ways than one. James N. Gianopulos, CEO of News Corp.’s Fox Filmed Entertainment, which is behind Avatar, sees big growth in 3D as the technology gets cheaper and more theaters acquire the necessary equipment. For film companies, Gianopulos told an informal late-night gathering at the Monaco Media Forum Nov. 11, 3D movies offer better profits as well. “Audiences value and are willing to pay incrementally for the enhanced presentation of 3D,” Gianopulos told BusinessWeek in a follow-up e-mail.

Three-dimensional movies are much easier to make than when they first gained popularity in the 1950s. Cameras are no longer the size of refrigerators, and the additional cost compared to a traditional film is a relatively modest 15%. In addition, the number of theaters able to show 3D movies is rising, in part because studios are helping theater-owners finance the necessary digital equipment. Distributing a digital film costs less than distributing a traditional 35-millimeter film, and studios are using the savings to help theater owners make loan payments on the new equipment.

Avatar, directed by James Cameron of Titanic fame and costing nearly $500 million, should provide impetus for more theaters to upgrade to 3D. And there’s another benefit. Because viewers need to wear special glasses to watch a 3D movie, content pirates can’t make illegal copies by simply pointing a video camera at the screen, as they often do. The no-taping aspect “is an incidental but valuable benefit,” Gianopulos says.

Monaco Media Forum: Springer CEO Clashes With Huffington

Posted by: Jack Ewing on November 12

Mathias Döpfner, CEO of German publisher Axel Springer, and Arianna Huffington, co-founder of the Huffington Post politics and news blog site, made sure the Monaco Media Forum isn’t just a digital media lovefest. Döpfner, whose empire includes Bild, Europe’s largest newspaper, debated with Huffington whether journalism published online should be free. The discussion before a media industry audience at a seaside Monaco hotel on Nov. 12 quickly got loud.

Döpfner pleaded for stronger intellectual property rules, sarcastically portraying the current state of online journalism as “stupid old-school guys who are investing in quality content…and new-school guys who are stealing it.”

That statement annoyed Huffington. “ ‘Stealing’ is not a word you should be allowed to use. We are meticulous about copyrights.” Döpfner quickly added that he hadn’t meant to imply that the Huffington Post was among the offenders.

Döpfner’s point was that news and analysis by professional journalists, as opposed to the mostly unpaid bloggers on Huffington Post, is threatened by web sites which gather content from traditional publishers, generating advertising revenue while doing little original research. “If you want to sell beer for free, fine. But don’t take our beer and sell it to someone else,” Döpfner said.

He expressed optimism that consumers can be weaned from the expectation that news content on the Web is free. "For hundreds of years people have been paying for things they are interested in." Huffington replied that the idea that publishers can change consumer habits is “incredibly hubristic.”

“The ship has sailed, consumer habits have changed,” she said.

Döpfner chided Huffington about her use of unpaid bloggers. “If all our journalists were working for free, that would be great,” he said. “You can handle the negotiations.”

Coke's Sponsorship of London Tube Runs into Problems

Posted by: Mark Scott on November 11

Christmas is still more than six weeks away, but Coca-Cola (KO) wants to tap Londoners' holiday cheer. On Nov. 11, the U.S. drinks giant announced a deal to sponsor performers (or buskers, as they're called in Britain) on London's Underground subway. The agreement, which starts on Nov. 30 and runs until Jan. 4, 2010, includes Coke-emblazoned logos across the British capital's public transport system, and will be tied in to the company's Christmas-related advertising campaign.

So far, so good. But there's a problem. Coke also wants singers to perform its theme tune 'Holidays Are Coming' and other Christmas carols as part of the viral ad campaign. Unfortunately, many of the 240-plus buskers -- who range from classical singers to rap artists -- have balked at flogging Coke's message. (Transport for London, which manages the Underground, says no one will have to perform a song or jingle if they don't want to).

According to the London Evening Standard, Michael Ball, a 47-year-old jazz guitarist, said:

"Not in a million years will I play some Coke jingle. Most buskers make half their annual income in December. Londoners are really up for it and generous at this time and we know what songs and music work. Do commuters really want to hear a corporate jingle from every busker? What a daft idea."

So will the campaign backfire? Probably not. Whether performers pump out 'Holidays Are Coming' won't matter that much after Coke secured the sought-after ad space on the Underground (used by millions of commuters each day). Still, it just goes to show that this time, Coke can't teach the world (of buskers) to sing.

Kraft's Hostile Bid for Cadbury Rejected

Posted by: Mark Scott on November 09

After months of planning, Kraft finally made its move on Nov. 9 for British candy maker Cadbury. Unfortunately for the Northfield (Ill)-based food giant, Cadbury reply was short and sweet: 'Thanks, but no thanks.'

The British firm's rejection of Kraft's hostile takeover isn't surprising. Under the proposal, the U.S. company is offering a cash-and-stock offer that values Cadbury at $16.5 billion. That's considerably less than most Cadbury shareholders had wanted, and mirrors the terms first offered to the company in late August. Since then, though, Cadbury's share price has jumped more than 30%, while Kraft's stock has fallen roughly 5%. No wonder, then, that Kraft's bid was quickly turned down.

So what next? Under Britain's so-called 'Put Up or Shut Up' rule, Kraft now has 28 days to convince Cadbury shareholders of the deal's value. Shareholders will then have an additional 60 days to make up their minds. Yet if market conditions don't change remarkably, Kraft will either have to walk away or increase its offer, particularly the cash component.

Unfortunately, its already-hefty debt burden makes any large-scale cash injection hard to justify. And convincing shareholders to take a less-than enticing offer will certainly be a tough sell. For Kraft, the questions now are: how much do we really want Cadbury? And how much are we willing to spend?

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Get the latest inside view on European from our on-the-ground team of reporters. From economic and political news, to technology and innovation, to lifestyle and culture, read insights from Europe channel editor Andy Reinhardt; Europe and Frankfurt bureau chief Jack Ewing; London bureau chief Stanley Reed, senior writer Kerry Capell, and correspondent Mark Scott; and Paris bureau chief Carol Matlack.

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