EU Clears Liberty Global Deal for U.K. Cable Firm Virgin Media
LONDON - The EU has approved Liberty Global's $22.5 billion (€17.2 billion) acquisition of U.K. cable giant Virgin Media, with its competition commission saying it doesn't have any concerns about the deal.
The deal will see John Malone's global cable operator Liberty Global take on BSkyB, in which Rupert Murdoch's News Corp. owns a 39 percent stake, in Britain. It also will make Liberty Global the largest pay-TV operator in the world.
At the end of 2012, Liberty Global had 18.3 million pay-TV subscribers along with 9.2 million broadband and 7.3 million telephony subscribers. Virgin Media had nearly 3.8 million TV subscribers and nearly 4.9 million overall consumer cable customers. Comcast ended 2012 with close to 22 million video subscribers, as well as 19.4 million broadband and close to 10 million telephony users.
"The transaction, with a value of €17.2 billion, would bring together the second largest Pay-TV operator in the U.K. (Virgin Media) and the largest cable operator in Europe (Liberty Global)," the EU's competition commission said. "The commission's investigation confirmed that the transaction would not raise competition concerns, in particular because the parties operate cable networks in different member states and because of the merged entity's limited market position in the wholesale of TV channels in the U.K. and Ireland."
The commission concluded that "the proposed acquisition would not restrict competition in these markets because TV content is licensed mainly on a national basis or for linguistically homogeneous areas and because the merged entity would still face sufficient competitive constraint from other players, such as TV content providers and competing pay-TV retailers."
It added: "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. Similarly, it is unlikely that the merged entity would shut out competing TV channel broadcasters from access to the retail pay-TV market, given the number of alternative distribution platforms to Virgin Media’s cable network and the importance of offering a large variety of TV channels in order to attract pay-TV subscribers."
Under the terms of the agreement, Virgin Media shareholders will get $17.50 in cash and Liberty Global Series A and Series C shares.