European Commission plugs in Liberty Virgin Media buyout

Competition authorities today approved the £15bn takeover of Virgin Media by Liberty Global without any conditions at all.

by Michael Northcott
Last Updated: 19 Aug 2013

Liberty Global is the largest cable operator in Europe, and it’s about to get even larger. The European Commission has announced that it does not have any concerns about monopolies over the industry, approving a £15bn bid to take over Virgin Media without any conditions whatsoever. It is a major coup for John Malone, the chairman of Liberty Global, who has been trying for some years to get a decent foothold in the UK cable market.

In a statement, the EC said: ‘The merged entity is unlikely to shut out competing Pay TV retailers by withholding its TV channels from them, given its very limited presence in the wholesale supply of TV channels and the incentive to license its TV channels as broadly as possible.’ It went on to say that there is a number of alternative platforms to which customers could turn, such as Sky.

Virgin Media’s staff who have shares in the company will enjoy a huge windfall of cash – the biggest of which will be for chief executive Neil Berkett, who gets $65m worth of shares for resigning once the takeover is complete. Richard Branson will (predictable) be another winner from the deal, as his 3% stake in the company will net him $300m. Not everyone will get as much as that, but around 2,700 employees signed up for a share scheme in the company in 2009 (including everyone from board level to call centre workers) and will get an average of £15,984 for the deal.

The deal is important as far as the cable industry is concerned, because it makes Malone a direct competitor to Rupert Murdoch, as his News Corp controls BSkyB. Murdoch and Malone have had an on-off business relationship as both partners and rivals for decades. For instance, in the 2000s, Malone built up an 18% stake in News Corp – the second-largest shareholding after Murdoch himself – but then swapped it for News Corp’s entire shareholder in DirecTV, an American satellite television business.

Furthermore, Liberty may now be able to pull some regulatory strings with this additional chunk of the market under its belt. Virgin has been angry in the past because although it pays license fees for BSkyB programmes, Sky will not allow Virgin to make the content available on multiple devices in the same way that it is available for Sky’s customers. This deal may provide the groundwork for loosening that grip.

So that’s it, and the deal could be done by the end of the year, providing there are no hiccups. With Liberty attacking it on one side and BT Vision on the other, Sky’s facing its stiffest competition in Pay TV for years…

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