Football flotation frenzy may be tempting TV's big players, but cable is going nowhere fast

Football frenzy has hit the City, as investors pile into the increasing number of Premier League clubs listed on the stock market. (Yes, this is a media column: read on.) By the close of the year, you can expect yet more teams to come to the market, enticed by the prospect of raising development cash to fund new stadiums and big transfer fees for hot-ticket players.

Sheffield United has just became the latest to list on the Stock Exchange, where its shares immediately raced to a premium. It joins such luminaries as Manchester United, the most valuable club by a long chalk, as well as Tottenham, Chelsea, and Leeds. Next to invite investors in will be Newcastle United, which is working on plans to raise pounds 50m through a flotation later this year. There could soon be a football index, made up of the publicly quoted clubs - an indication of just how hot the sector is.

But as is usual with trendy new stocks, the initial hype has been replaced in some quarters by negative sentiment. "It's all been overdone," the doubters cry. "These high valuations cannot be sustained."

Well, all right, it is difficult to say just what an English football club should be worth, and the City is divided. What the doubters forget, however, is the reason the frenzy was ignited in the first place: the huge potential for exploiting broadcast and marketing rights. These cannot be quantified with any precision, but the money on offer will be stupendous.

In the days of the broadcasting duopoly, the BBC and ITV carved up the rights to sport between them, and the amounts generated by this were minuscule. All that changed in 1992 when Rupert Murdoch's BSkyB bought exclusive live rights to the matches of the Premier League, offering a rich package that transformed the financial health of the top clubs. When the deal was renewed last year, for a whopping pounds 670m over four years, the clubs were in an even better position.

But the basic broadcasting rights, as lucrative as they are, pale next to the real prize: pay-per-view rights. By the end of the decade, punters will be able to watch football matches as and when they like, paying per game or for a full season, on a live basis or at a more convenient time through an extensive repeats service. Pay-per-view could be worth as much as pounds 2.5bn a year to the top football clubs - more than enough, surely, to warrant all that speculative frenzy on the stock market?

Further proof that football is a likely money-spinner comes from the broadcasters themselves. A glittering line-up of ITV companies and other media groups have looked seriously at the idea of investing in football clubs, in an attempt to own the rights. Pearson Television's Greg Dyke proposed taking stakes in two football clubs this summer, a plan which failed to win board support. Granada's former media chief Duncan Lewis also looked hard at the possibilities. United News & Media, Lord Hollick's television and print empire, still has not ruled out investments in sport. It can only be a matter of time before one of the media giants actually makes a move on football.

While the traditional broadcasters mull over the finer points of rights strategy, the cable industry is struggling to work out a strategy of any kind. The sector remains in a bit of a mess, and until it can find common ground, and the guts to defend it, cable will continue to have a poor reputation.

Symptomatic of the problem are two issues confronting the industry: the disarray at Cable & Wireless Communications, the would-be sector leader, and the persistent doubts about the management at Telewest.

C&W Comms was meant to be the start of a real solution to cable's problems. By bringing together three cable operators - Nynex CableComms, Bell Cablemedia and Videotron - and merging them with C&W's Mercury phone division, Cable & Wireless would create a single, integrated, phone, TV and interactive service giant, able to compete with BT on one side and with BSkyB on the other. But mergers are complicated things. Thousands of jobs will have to be shed and executives paid off. Until last week, progress on integrating the operations had been stymied above all by the lack of a dedicated executive.

Last Friday, the company finally made an appointment, unveiling the former Granada executive Graham Wallace as the new chief executive. Well-respected, he will nonetheless be severely tested by the need to move quickly on the merger front, even as he attempts to set a coherent development strategy for the new group.

Similar management doubts have hit Telewest, currently the country's largest operator. The former chief executive, Alan Michels, left last year, and was replaced on an interim basis by Stephen Davidson. Insiders at the company insisted at the time that Davidson would be confirmed in the position by Christmas. Yet he is still acting chief executive, and will not know his fate until a board meeting this week. A majority of large shareholders - including TCI - are believed to support him, but a vocal minority on the board are unsure about his aggressive strategy - he is leading cable's efforts to develop digital services - and believe someone else might be better.

This year is cable's make-or-break period, by all accounts. The launch of digital TV, the roll-out of Internet modems and the introduction of new interactive services will test cable's ability to compete against well-heeled BT and BSkyB. Cable ought to flourish: after all, it has the best platform technology for integrated services, and offers the most flexible mix of products. But until Wallace is in place and the C&W Comms merger is completed, there will be persistent doubts about the industry's future.