|10-07-07, 08:31 PM||#1 (permalink)|
Join Date: Nov 2005
Virgin Media suitor may axe Branson link
Carlyle, the US private equity giant, is considering axing the Virgin brand name if it takes over UK cable group Virgin Media. Such a move would sever the media company's connection with Richard Branson, and pave the way for a rapprochement with R. Murdoch's BSkyB.
Virgin Media and the satellite operator have been locked in a bitter row since the end of last year when Murdoch thwarted an attempt by the cable firm to take over ITV by acquiring a blocking stake.
Carlyle, which has offered £11bn for Virgin Media, is weighing the merits of retaining its connection with Branson's Virgin on the grounds that without him, it may be easier to restore relations with BSkyB, whose basic channels have been withdrawn from cable following a spat over pricing.
Branson has accused Murdoch of trying to stifle competition by withdrawing channels such as Sky One and Sky News, and by his move on ITV. The issues raised by the extraordinary clash between the two business titans are the subject of an inquiry by the competition authorities and being fought out in the courts.
News that Carlyle may ditch the Virgin brand has surprised industry watchers who view cable's link with a popular brand as an opportunity to widen its appeal. Cable's reputation has been damaged in the past by poor customer service and lacklustre programmes.
One observer said: 'Virgin Media has spent £25m promoting the company which only came into existence about six months ago. It seems odd that Carlyle is ready to write that money off and start again, especially as Virgin strikes a chord with the British public.'
But City sources say some of Carlyle's most senior executives are arguing that cable would be better off without Branson as it could then swiftly settle its differences with BSkyB.
They caution that no firm decision has been made and that a number of legal issues would need to be resolved beforehand, such as how to dismantle a licensing agreement with Virgin which allows cable to use the brand for the next decade, at a cost of around £9m a year. But it is almost certain that Carlyle would be able to end the accord under a change of control clause.
Detailed discussions between Carlyle and Branson are yet to take place and it is entirely conceivable that the two sides could decide to work together.
Although it is called Virgin Media, Branson doesn't own it - he controls 10 per cent of the shares and rights over the Virgin name. He is thought to be keen to retain his influence in the cable company, but he could cash out for a tidy profit if he and Carlyle fail to see eye to eye.
He has already made over £150m since he reversed his Virgin Mobile into NTL last autumn, creating Virgin Media. His shareholding is worth £577m.
Carlyle's strategy is shrouded in secrecy and it may want to drop plans for Virgin One, a branded channel designed to plug the gap left by the withdrawal of the Sky channels. Other venture capitalists could challenge Carlyle for the company: KKR and Providence are rumoured to be hovering.
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|10-07-07, 08:34 PM||#2 (permalink)|
Join Date: Aug 2006
Re: Virgin Media suitor may axe Branson link
Talk about sticking your tongue straight down the back of uncle Rupes trousers
No point in messing with it in my opinion. British TV is screwed either way