letter to Rupert Murdoch

##copy to Mr Murdoch, CEO, News Corp Head Office in Surry Hills, NSW, Australia##

##copy to Mr Murdoch c/o the Fox offices in Albany, NY, USA##

8^th March 2009

Re: Blinkx

Dear Mr Murdoch

I am writing to you as a shareholder of Blinkx, the self-proclaimed “world’s largest and most advanced video search engine”.

Sadly the ability of Blinkx’s management to live up to such proud boasts has – so far at least – proven woefully inadequate. A series of unforced errors – the failure to release what many shareholders see as a key product, Transaction Hijacking, in time for the Christmas 2008 market; the willingness of the CEO Suranga Chandratillake to shoot his mouth off, making rash promises (in public, on the record) which are not subsequently fulfilled; and not least what looks from where I’m standing like an amateur and totally bungled approach for the US company Miva – has resulted in a tanked share price and a management team which seems to now have zero credibility with shareholders and the market.

From everything I’ve read about you, Mr Murdoch, I can’t imagine you shedding any tears for Blinkx shareholders – why should you?

But as an astute businessman I would expect you to be interested in a once-in-a-lifetime opportunity to pick up what could prove to be the Google of video search at a bargain-basement price. I am writing to you today to suggest that News Corp should make an approach for Blinkx

I’ve read news reports that you were interested in buying Blinkx from Autonomy several years ago before it was spun out: if you were interested then you must be even more interested now – 35 million hours of long-form, professionally produced video; more than 500 content and syndication partners; world-leading technology protected by some 111 patents; and with partnerships in place with some of the leading media and technology companies in the world, including the BBC and Microsoft UK.

In addition to all of that, Blinkx would fit particularly well into your own online strategy. Fox recently acquired Utarget, which I believe sells media planning and buying services to match Blinkx’s search technology with appropriate contextual advertisements. Buying Blinkx would allow you to vertically integrate these operations, extracting greater revenue from the value chain. Why just make money from planning and buying when you could also make money from the back-end technology?

In addition, a purchase of Blinkx would allow a licensing of Blinkx’s search technologies to Hulu, strengthening the position of your joint venture with NBC in an increasingly crowded market place.

As regards price: my own view is that you could probably acquire Blinkx for somewhere in the region of 60p a share. The price may currently be around 12.5p, but it seems unlikely that the large institutional investors who bought into the IPO at 45p (only 18 months ago) would be persuaded to sell for less than they paid then. However, in the current markets a return of 30% on their investment in under two years – at an offer price of 60p a share – would almost certainly gain a positive hearing.

My motive in this is transparent, Mr Murdoch: I wish to see a return on my investment, and have absolutely no confidence in Blinkx management to deliver one. I have held since shortly after the IPO and have watched with growing incredulity and anger as Blinkx’s management has made what I consider to be mistake after mistake. The decline in the share price supports my view.

In any case, none of that is your concern. But the chance to buy the next big thing in video search for a price in the region of £175m probably should be your concern. I would strongly recommend you take a close look at Blinkx.

Yours sincerely,

Contact details for Utarget

Note to self: include Rupert Murdoch in the next batch of letters. Why should News Corp/Fox just make money from Utarget's media planing and buying services, when they could buy Blinkx and make money from the back-end tech as well. Vertical intergration has got to be the way to go...

A roundup of some (not recent) takeover speculations

Blinkx 'good enough to scare Google' [8 June 2008]

"Blinkx recently outpaced Google Video in Britain, and shares jumped last month with rumours that Google was eyeing the company for takeover"

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Yesterday's trading: Microsoft eyes Blinkx [9 May 2007]

"Doctor Mike Lynch was Britain's first software billionaire. His beloved Autonomy flirted with the Footsie during the dotcom boom before falling dramatically out of bed, along with many other techno high-fliers, when the bubble burst in March 2001.
It took some time for him and the company to recover but the shares have doubled since January 2006. Sold down yesterday to 732½p at the outset, they rallied strongly to touch 827p and close 34½p higher at a 800½p amid rumours that US computer giant Microsoft could bid for its Blinkx consumer division before it gets demerged and floated on Aim later this month."

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Rumors: Yahoo's Free VoIP; Google's Free Web Access; Murdoch's Blinkx Buy [August 18 2005]

"And on Monday, Reuters reported that News Corp. is eyeing an acquisition of search provider Blinkx, citing persons close to Rupert Murdoch's media conglomerate who told the Los Angeles Times, however, that negotiations with Blinkx were not as far along as Murdoch had implied during an earnings conference call with analysts."

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If all those companies wanted Blinkx then, hard to see why they're not still interested now. 32 million hours of video indexed, over 500 partners, Ad Hoc already released and Transaction Hijacking ready to go (and it should have gone before Christmas, in my opinion) - all that and a share price stubbornly stuck at below a third of its IPO price.

C'mon guys - it's clear that Blinkx management doesn't have a clue about delivering shareholder value (by which I mean a strong and growing share price). Someone bid for this company and put shareholders out of their misery? The buyer wins, shareholders win. the only losers would be Mike Lynch and Blinkx management - but since they've shown not the slightest concern for Blinkx shareholders I can't think of a single reason why I shouldn't reciprocate...