As much as Liberty Global’s Virgin Media buy might pit Liberty Media Chairman John Malone against Rupert Murdoch’s BSkyB in Europe, a Reuters story says that battle may not include expensive content rights like English Premier League soccer. Virgin Media is BSkyB’s biggest rival across the pond.
Liberty is buying it for about $15-$20 billion in stock and cash, pitting Malone against his old rival Rupert Murdoch in British pay-television and broadband. Murdoch’s News Corp. owns 39% of BSkyB.
Both Virgin Media and Liberty Global said the deal, worth more than $23 billion including debt, was more about expanding the U.S. group’s presence in Europe than shaking up British pay-TV.
Virgin Media had a strong commitment to share content with Sky, Liberty Global CEO Mike Fries said 2/6, and he wanted to make sure Virgin Media had access to premium programming.
“We do not see any reason why that would change or any reason why Virgin Media needs to compete with Sky for that premium content,” he told reporters.
Liberty will serve 25 million customers in 14 countries after the deal, overtaking Comcast as the world’s number-one cable TV operator by subscriptions, Fries said.
Virgin Media was created from the merger of NTL and Telewest, and Richard Branson’s Virgin Mobile. Following the deal, about 80% of Liberty Global’s revenue will come from five European countries: the UK, Germany, Belgium, Switzerland and the Netherlands, reports The BBC.
“Adding Virgin Media to our large and growing European operations is a natural extension of the value creation strategy we’ve been successfully using for over seven years,” said Fries.
That deal was led by Virgin Group’s Richard Branson, who still owns around 3%, and who will make about $316 million from the Liberty takeover.
Virgin Media’s first few years were marked by lengthy and costly legal fights with BSkyB over access to channels and content.
More recently, however, Virgin Media boss Neil Berkett has stabilized the group, taking it into the black two years ago after years of losses racked up in a costly network expansion. In a peace deal in 2010, it sold BSkyB a package of channels and offered some Sky HD channels to its own customers.
Since then, Virgin Media has focused increasingly on selling high-speed broadband and technological innovations such as digital TV service Tivo.
Fries said he would not risk the stability of the market by engaging in new bidding wars. “Neil’s done a great job with building a strong relationship with Sky that is not based on personalities or drama,” he said.
Last year, BSkyB and telecom operator BT signed a three-year deal to air English Premier League matches.
RBR-TVBR observation: Whether they spar over sports/content rights or not, the two companies will be competing both in the pay TV and broadband arenas in Europe. Liberty will be focusing on its own content and value propositions for subscribers, as well as bidding on new rights deals as they become available. Fries statements were more about being respectful about entering that market, rather than implying kid gloves when it comes to BSkyB.
