Liberty Global (UPC) to buy Virgin Media UK

icdg

Looks like the two parts of the old NTL may be re-united again under the UPC banner. Virgin Media have issued a stock exchange announcement that they are in takeover talks with Liberty Global.

http://phx.corporate-ir.net/phoenix.zhtml?c=135485&p=iframeRNSArticle&ID=1781294&highlight=

Eamo71

wow! Very interesting!

ongarite

Looks like its a deal:

John Malone's international cable business Liberty Global has agreed to acquire U.K. cable-television and Internet provider Virgin Media for $16 billion, in a deal that may create a stronger rival to market leader British Sky Broadcasting Group.

Liberty Global will pay for the deal using a mix of cash and its stock, totaling $47.87 per Virgin Media share, based on Monday's closing prices, the companies said in a joint statement Tuesday.

That reflects a premium of 24% to Virgin Media's closing price Monday, though it is only slightly higher than the closing price of $45.61 on Tuesday, when news of an imminent deal had already circulated.


Liberty Global is in discussions with Virgin Media, which has a 40% share of the U.K. market. Heard on the Street's Renee Schultes looks at how a tie-up would work and what competition would be like for the U.K.'s largest cable operator, BSkyB. Photo: Getty Images

Liberty and Virgin said they expect about $180 million in annual cost savings once the companies are fully integrated. "We think we've been conservative with that number," Liberty Chief Executive Mike Fries said in an interview. "The synergies are traditionally coming from areas like network and IT and procurement. What we do every day is buy technology from the same vendors and negotiate contracts from the same programmers."

bk

Very interesting news that raises lots of questions.

It looks like this new merged company maybe big enough to go head to head against Sky for Sports and Movie rights.

Will they rebrand UPC to Virgin Media or vice versa or just keep the brands separate?

Virgin Meida use TiVo for their set top boxes. Will these come to Ireland? Or will they scrap them and bring the Horizon box to the UK?

listermint

bk wrote: »

Very interesting news that raises lots of questions.

It looks like this new merged company maybe big enough to go head to head against Sky for Sports and Movie rights.

Will they rebrand UPC to Virgin Media or vice versa or just keep the brands separate?

Virgin Meida use TiVo for their set top boxes. Will these come to Ireland? Or will they scrap them and bring the Horizon box to the UK?

Or do nothing at all, which id imagine is going to be the outcome

bk

So it turns out they are going to keep the Virgin Media brand in the UK.

But will they rebrand UPC to Virgin Media in Ireland or keep them separate, I'm guessing separate now.

bk

listermint wrote: »

Or do nothing at all, which id imagine is going to be the outcome

On brand maybe, but it makes sense to go with one vendor or the other for set top boxes in order to save on purchase and support costs. They have already said IT and networking procurement is one major area where they expect to save money.

This could also be good news for UPC phone support staff in Ireland, they might expand here in Ireland as a cheaper location to the UK, to support the UK customers. Like Sky seem to be doing.

dpe

According to The Guardian the whole Liberty Global operation is being relocated to the UK from Delaware, and they're definitely keeping the Virgin brand in the UK, but its not clear about elsewhere. They've invested a lot in the UPC rebrand across Europe in the last few years, and I'm not sure Virgin has that much resonance across mainland Europe.

In real terms I doubt there will be much change for Irish customers, and based on prior history I doubt you'll see Liberty making waves in the content market

bk

dpe wrote: »

According to The Guardian the whole Liberty Global operation is being relocated to the UK from Delaware, and they're definitely keeping the Virgin brand in the UK, but its not clear about elsewhere. They've invested a lot in the UPC rebrand across Europe in the last few years, and I'm not sure Virgin has that much resonance across mainland Europe.

Agreed.

dpe wrote: »

In real terms I doubt there will be much change for Irish customers, and based on prior history I doubt you'll see Liberty making waves in the content market

Well they already are a major player via Chellomedia. Owning Virgin Media now and in many other large markets, I'm not so sure that things won't be changed up significantly. Certainly, I'd be worried, if I was Sky.

devnull

I'd say Virgin may be rebranded as UPC sometime in the future, but it won't happen in the near future, same happened with NTL here, they said they would not rebrand it but it was obvious they would later.

belmulletman

Just read this now! So UPC's parent company, Liberty Global, just bought Virgin Media for 23+ BILLION US Dollars IN CASH!!

http://www.engadget.com/2013/02/05/liberty-global-buys-virgin-media-for-23-3-billion/

This may have no effect on anything here, but it could do! Virgin have Tivo in the UK and they are generally known for being a good system / content!

bk

Already been discussed here, threads merged.

dpe

bk wrote: »

Agreed.Well they already are a major player via Chellomedia. Owning Virgin Media now and in many other large markets, I'm not so sure that things won't be changed up significantly. Certainly, I'd be worried, if I was Sky.

Chellomedia is a bit of a hangover from an earlier period (inherited from their Dutch acquisitions), a bit like Flextech was in the UK (UKTV) before the merged Telewest/NTL flogged it back to the BBC. Its not insignificant (€0.5bn revenue) but small potatoes when compared to the overall cable operations. In other words, exactly the kind of business that gets sold off when times are hard.

What Liberty have been quite good at is making a better fist than Sky of the "triple play" model whilst making sure they have access to wholesale pricing on sports, usually through legal threats about monopolistic practices. I don't really see that changing in the short-term. On the other hand I don't think the UK headquarters is a long-term thing; they'll be domiciled in the UK just long enough to take advantage of the Virgin losses (and subsequent tax benefit). After that they'll probably end up here.

Eamo71

bk wrote: »

Very interesting news that raises lots of questions.

It looks like this new merged company maybe big enough to go head to head against Sky for Sports and Movie rights.

Will they rebrand UPC to Virgin Media or vice versa or just keep the brands separate?

Virgin Meida use TiVo for their set top boxes. Will these come to Ireland? Or will they scrap them and bring the Horizon box to the UK?

It's particularly interesting given that Mike Fries recently dissed TiVo during an interview-- check out the video at the end of the article here http://www.broadbandtvnews.com/2013/01/25/fries-cable-learning-from-netflix-but-he-has-the-content/

Eamo71

listermint wrote: »

Or do nothing at all, which id imagine is going to be the outcome

it'll be Horizon here. There are Irish users testing them now. Check out the Horizon thread here http://www.boards.ie/vbulletin/showthread.php?t=2056579482&page=11

I'd say TiVo will continue in the UK for the time being. UPC has invested too much money into Horizon to scrap it now plus they had the option to go with it a few years ago and opted not to. Mike Fries says that Horizon is far superior to TiVo. let's hope so. Horizon due here in the next 2-3 months.

bk

I can understand why they would go with Horizon over TiVo. Being their own box, with their own branding, means they have more control over it and it's future development.

I assume that in the long term the Horizon box will be introduced in the UK too. The TiVo box with existing users won't be replaced, but new users would get the Horizon box.

This would allow them to eliminate their licensing and development costs with TiVo while getting better economies of scale on manufacturing the Horizon box.

icdg

Yeah in terms of integration it will likely be slow, Virgin Media will be a big beast for UPC to swallow. However as in Ireland, where they were paying Virgin Media for the use of the NTL brand, they will want to eventually switch to a brand they own as opposed to continuing to pay licencing fees to Richard Branson. Depends what the terms of the deal with Branson was of course, there was apparently a large upfront fee attached. But Virgin Media will eventually become UPC, I've no doubt about that. In Ireland it took nearly five years for the change to take place and it may be the same here.

In terms of practicalities, integrating (or rather re-integrating, since they were once the same company) UPC Ireland with Virgin Media may be UPC's best chance of securing savings in the short term. Sky have a lot smaller costs than UPC here since they effectively operate one system in both markets - Sky Ireland is little more than a sales, marketing, and CS operation - whilst UPC and Virgin Media are now completely separate.

The Cush

Liberty Global has won EU approval for the takeover of Virgin Media in a deal worth an estimated $23.3 billion

http://www.broadbandtvnews.com/2013/04/15/virgin-media-sale-wins-european-approval/

The Cush

UPC Ireland chief executive Dana Strong is to become the chief operating officer of Virgin Media and has been named as chairman of UPC Ireland

http://www.irishtimes.com/business/2.790/upc-ireland-chief-to-move-to-virgin-media-1.1416579

The Cush

Liberty Global has published its first Virgin Media results since its takeover was approved in April