US cable company wants to buy Virgin Media
Virgin Media has confirmed it is engaged in negotiations that could see it taken over by US cable company Liberty Global within days.
Liberty Global has been interested in acquiring the Virgin Media for around a decade, even before the 2006 merger between NTL and Telewest. Liberty Global chairman John Malone made two unsuccessful attempts to buy NTL and bought a quarter of Telewest’s equity.
Virgin Media currently provides telephone, broadband, mobile phone and cable television services in the UK, as well as the London Tube Wi-Fi network.
Virgin Media takeover
“Virgin Media confirms that it is in discussions with Liberty Global, Inc., a leading international cable company, concerning a possible transaction,” a spokesperson told TechWeekEurope. “Any such transaction would be subject to regulatory and other conditions. A further announcement will be made in due course.”
Any acquisition would pit Malone against rival Rupert Murdoch, whose News Corp owns one of Virgin Media’s biggest competitors, Sky. Malone once held an 18 percent stake in News Corp, prompting Murdoch to offer the company’s shares in DirecTV in exchange for the holding.
Liberty Global recently increased its stake in Belgium’s Telenet to 58 percent and has networks in the Netherlands, Germany, Switzerland and Chile. It might hope to make savings by pooling the purchase of set-top-boxes and other technology, but it has been noted that such cost reductions are minimal if the networks are not adjacent.
Analysts have suggested that any acquisition could be the biggest shake-up in the UK telecoms and media sector since the merger of T-Mobile and Orange in 2010 which created EE.
“While Liberty’s play for Virgin is likely to be driven by its long term vision for the value a foothold in the UK will have a pan European triple-play business, and the competitive need to fight News Corp at this scale, in the near term it will make the UK the ring for a straight slug fest between two global pay-TV heavyweights, John Malone and Rupert Murdoch, as they battle for UK fixed broadband, fixed voice and pay-TV subscribers,” commented Adrian Drury, principal analyst at Ovum.
“If Malone closes the deal, this will be a very interesting competition to watch and real test for the Liberty vision of the future of cable TV and internet services.”
“Also expect that there would be some collateral damage, potentially other UK telcos trying to solve their triple play pay-TV challenge , such as Talk Talk and BT.”
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