Market downturns do help to bring rivals together

It's not quite as incredible a merger as, say, Manchester United

and Arsenal forgetting their differences and becoming one club, but 365

and's link-up will cause a few jaws to drop.

It's certainly a sign of the times. A glance at the ad sales houses

shows that consolidation is the theme of the day. It makes sense that

Chrysalis, which owns, and 365, are pooling internet

operations in a new company to cut costs.

Market downturns may often increase competition but they also can lower

barriers between rivals. It's one of the things that fuelled The

Carphone Warehouse's Charles Dunstone's comments last week when he was

quoted saying that downturns were the time when business gets


Competitors can now look for the similarities rather than differences

between them, particularly if they are looking to grow a new market.

Instinctively it sounds good, though perhaps not as much as's

apparent cherry picking of rival Sportal's overseas operations. has just bought

The Chrysalis/365 deal is not as comprehensive as it might have once

been, but this is a clue to how it could work. Effectively, 365

Corporation and Chrysalis are merging their intenet activities; however,

neither group has as many pure internet plays as they once did. The 365

Corporation has concentrated recent launches on telecoms and gets income

from premium-rate phone businesses. Its management can now concentrate

on that, while gains by losing a competitor.

Both businesses should get a clearer route forward but new structures

and operations can be a distraction. There's been talk of Chrysalis's TV

connections and the opportunities they could provide for 365.

Fine. But exploring such deals takes time and resources. If the

joint-venture cannot develop the site's existing models and its reliance

on advertising then it needs to think on. Maintaining such illusions

would be the new-media equivalent of an own goal.


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