Liberty Global gobbles up Virgin Media

For £14.9 billion, no less
Darren Allan

February 6, 2013
Virgin Media UK

In a huge move, US-based Liberty Global is to acquire Virgin Media to form what it calls the “world’s leading broadband communications company.”

The acquisition will cost Liberty Global $23.3 billion (£14.9 billion) in stock and cash, although it’s subject to shareholder approval yet – and for that matter, the approval of regulators, too.

The new company will span 14 countries and serve some 25 million customers.

Mike Fries, President and CEO of Liberty Global, commented: “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.”

“Virgin Media will add significant scale and a first-class management team in Europe’s largest and most dynamic media and communications market. After the deal, roughly 80 per cent of Liberty Global’s revenue will come from just five attractive and strong countries – the UK, Germany, Belgium, Switzerland and the Netherlands.”

“Like all of our strategic acquisitions we expect this combination to yield meaningful operating and capex synergies of approximately $180 million per year upon full integration.”

How much of that $180 million worth of annual cost savings will come at the cost of jobs isn’t clear – if any of it – but early noises indicate that no customer-facing jobs will be going, at any rate.

Should the deal go ahead, then Liberty Global will become the main pay TV rival of dominant BSkyB in the UK.

Virgin Media will keep its brand name in the UK, however.

So what does this mean for Virgin customers in this country, assuming the deal is approved by regulators? Theoretically, the impact should be fairly minimal, at least in the short term.

The brand stays the same, as no doubt will pricing and current roll-out schedules – and the cost cutting that’s being done should be relatively low impact, too.

Before very long, though, the added muscle the Virgin Media brand has behind it could well mean more competitive deals, with any luck, as the company tries to take lumps out of Murdoch and BSkyB.

The flipside of cheaper prices and an even swifter expanding user base off the back of them, is that the company will need to stay on top of keeping the fibre bandwidth flowing, of course.

Some customers already make a point of moaning about the quality of broadband service during peak periods.

At any rate, this is a major, exciting development for Virgin, and it will most definitely be interesting to see how it unfolds from here.






 

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