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City Republic: Nike, US interest rates and C4's birthday

City Republic is the latest great new addition to BR. Every Monday and Wednesday, Stephen Foster takes a personal view on what the financial markets are doing and what it means for marketing and media.

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'Iron Mike' Ashley takes on Nike
Say what you like about him (and what most people in the City say is unmentionable here), Sports Direct owner Mike Ashley certainly likes a fight.

Now he's bought 29.9% of football kit specialist Umbro, potentially scuppering Nike's agreed £275m bid for the company.

Ashley likes to discount premium brands like Nike and Adidas to lure shoppers in who will buy his cheaper (and more profitable) own brands like Donnay.

Nike and Adidas take a rather dim view of this and are reluctant to supply him with their latest products. He clearly doesn't want Umbro to go the same way.

Since going public, Sports Direct's value has approximately halved, which is why the City doesn't like Ashley, who made £900m from the sale.

But Ashley doesn't seem to care much and has indulged his passion for brands since by buying US boxing equipment firm Everlast for £90m and snapping up Newcastle United with £134m of his own money.

Pundits reckon Ashley simply wants to cut a deal with Nike rather than buy Umbro himself.

P&G leads the march of the household giants
If you ever wondered what those guys from Cincinnati wearing ties were doing at the Cannes ad film festival, you've got your answer.

Procter & Gamble’s profit for the quarter to end September came in at $3.08bn, up 14% from last year.

Sales were up 7.5% to $20.2bn and margins increased a bit too. The company is forecasting an even better return in the next quarter (well, someone's got to clean the house even if it's being repossessed).

Rival Colgate Palmolive also reported healthy earnings with profits up from $344m to $420m.
And the head of Reckitt-Benckiser, their European household products rival, apparently earned $22m last year. So this lot must be doing something right.

The much-mocked P&G has switched a lot of its media online and, testimony to its visits to Cannes perhaps, loosened up its approach to creativity.

And it's making almost as much money as Microsoft.

P&G's shares actually fell by a chunky 3.5% on the Dow Jones Index, having disappointed some excitable analysts. To be fair, the company did warn that rising commodity prices might dent profits sometime in the future.

Good results all the same.

The world waits on Big Ben
Ben Bernanke, that is, the chairman of the US Federal Reserve.

Later today Ben will shave a quarter point off US interest rates, taking them down to 4.5% following the recent half-point cut. Or he's expected to, anyway.

If he doesn't you might just find US investment bankers and hedge funders queuing up to jump off the nearest window ledge.

The sub-prime mortgage overhang is still a big worry in the US and the US is still the world's biggest economy, one that absolutely no-one (apart from Osama Bin Laden perhaps and even he's got his investments to look after) wants to see going into recession.

So the markets are banking on Ben. Will he be bold and cut a half point?

And what will Bank of England Governor Mervyn King and those wusses on the Monetary Policy Committee in the UK do?

Sit on their hands, as usual.

What’s to do with Channel 4?
Channel 4 is 25 this week, a huge success by any standards.

On these pages you can read Jane Simms' excellent Marketing article about the history of the channel and what awaits it.

What awaits it lies somewhere between two of Jane's quotes. Founder Jeremy Isaacs says the channel should be "for all of the people some of the time" and the merciless Chris Locke, from big media buyer Starcom, says it needs to be "for all of the people more of the time".

They're both right.

Isaacs knows what's achievable, and what the channel does best (let's face it, he did it brilliantly). Locke knows what C4 needs to survive in its current guise.

Quite clearly these two views don't line up.

C4's trading policies have become more and more aggressive as it fights with ITV and ever more digital channels.

The current management of former Pizza Express chairman Luke Johnson and ex-BBC marketer and CEO Andy Duncan seem to have thrown in the towel, Duncan saying it needs £300m or so from Ofcom to keep going as it is.

But this obviously won't work. It's a bit like saying you want to be half-pregnant.

C4 ain't what it used to be under Isaacs and his successor Michael Grade; it's supped too deeply at the trough of 'Big Brother' to be the commercial version of BBC Two it was always intended to be.

So should it be privatised?

As such it might well disappear in the end but £2bn or so for the Treasury would probably persuade the Government to let events take their course.

Stephen Foster is a former news editor of Campaign, former editor of Marketing Week and Evening Standard ad columnist. He is a partner in Editorial Partnership and writes the blog www.editco.net and Politics of the Media for Brand Republic.

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