Cable Operators

Malone Pursues Virgin Media

UK Cable Giant Confirms Talks With Liberty Global 2/05/2013 5:20 AM Eastern

British cable giant Virgin Media confirmed that it is in discussions with John Malone’s Liberty Global concerning a possible takeover, which could further solidify Liberty’s dominance in the European cable landscape.

“Virgin Media confirms that it is in discussions with Liberty Global, Inc., a leading international cable company, concerning a possible transaction,” Virgin Media said in a terse statement Tuesday. “Any such transaction would be subject to regulatory and other conditions. A further announcement will be made in due course.”

No formal offer has been made, according to reports, but Liberty Global is expected to launch its bid for the cable giant within days. Virgin Media has a market capitalization of about $10.4 billion.

The Financial Times first reported Monday night that the two companies were in talks. Liberty Global is the largest cable operator in Europe with about 19.6 million subscribers in 13 countries. Although the company does have about 1 million customers in Ireland, it has no presence in the United Kingdom. Virgin Media, with about 4.9 million subscribers, is the largest cable operator in Britain, but still lags far behind the dominant provider in the realm, British Sky Broadcasting, which has about 10.3 million customers. The third pay TV competitor in the market – BT Group’s BT Vision – has about 800,000 subscribers in the country.

An acquisition of Virgin Media would give Liberty a stronghold in the U.K cable, telephone and Internet market as well as pit Malone against another old school media mogul, News Corp. chairman Rupert Murdoch. News Corp. owns a 39% interest in BSkyB. The two have clashed in the past, most notably in 2004 when Malone’s Liberty Media began buying News Corp. voting stock, eventually amassing a 19% voting stake in the media giant, second only to the Murdoch family. The two called a truce in 2006, with Liberty agreeing to exchange its News Corp. interests for control of DirecTV. DirecTV was spun off to Liberty shareholders in 2009.  

Virgin Media stock, which trades on the NASDAQ Exchange, was up 16% ($6.43 per share) to $44.93 each in early trading Tuesday. Liberty Global shares were down 4.25% ($2.96 each) to $66.51 per share in early trading Tuesday.

Virgin Media was created in 2006 after U.K. cable operator NTL Inc. purchased wireless communications company Virgin Mobile from British billionaire Richard Branson in 2006. NTL rebranded itself after the acquisition under the Virgin name, which at the time was the most recognizable brand in the U.K. Branson currently owns about 3% of Virgin Media, according to reports.

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