Liberty Global Shareholders Approve Virgin Media Acquisition
LONDON -- Shareholders of international cable operator Liberty Global on Monday approved the acquisition of U.K. cable giant Virgin Media.
Virgin Media shareholders will vote on the $23.3 billion deal, which is expected to close in the coming days, on Tuesday.
In a special shareholder meeting in Littleton, Colo., Liberty Global CEO Mike Fries and chairman John Malone touted the benefits of the company's latest purchase.
"This is one more brick in the wall of scale in Europe, which will ultimately pay real dividends," said Malone during a question-and-answer session, calling scale "critical." Cable operators tend to benefit from scale when it comes to their programming costs and other expenses. Liberty Global and Virgin Media on a combined basis currently have more TV subscribers than U.S. cable giant Comcast.
But Malone once again highlighted the importance of broadband Internet services for cable operators today, saying that British cable firms until a few years ago made the mistake of trying to "duke it out" with satellite TV giant BSkyB over video subscribers. Now, Virgin Media is "more of a terrestrial connectivity player," he said, calling "high-speed connectivity the king of services."
Liberty Global reiterated that its expects broadband and Virgin Media's mobile offerings to be key services at a time when usage of online and mobile video continues to grow quickly.
Asked about how the U.K. pay TV and broadband market has changed in recent years, Fries said "it is a much more rational environment," with the likes of BSkyB, in which Rupert Murdoch's News Corp. has a 39 percent stake, and telecom giant BT "essentially growing at a modest pace."
Asked about the relationship with BSkyB amid Malone's on-and-off rivalry with Murdoch over the years, Fries said both Virgin Media and Liberty Global have "a good relationship with Sky." Having News Corp. veteran Tom Mockridge as the new CEO of Virgin Media "doesn't hurt" either, he added. "We have a good opportunity to build that relationship further. It is a very synergistic relationship," said Fries. After all, Virgin Media relies on some of BSkyB's content, while BSkyB gets paid by Virgin Media, he said.
With Virgin Media, Liberty Global will have a presence in 14 countries, including the U.K., 11 other European countries, as well as Chile and Puerto Rico.
The company's top executives on Monday signaled they would continue to look for acquisitions at the right price.
Asked if Virgin Media would slow down Liberty Global's deal appetite because it is the company's biggest-ever acquisition, Fries said: "We wouldn't make a transaction that would debilitate us and take us off the market. … We'll be opportunistic," although there is no deal the company feels it needs to do well.
He added that his team has never missed acquisition integration plan targets materially. "We are confident it will be seamless," he said. "I don't see any huge challenge."
Malone said the Virgin Media deal means that there is "one more regulatory body that is happy that we are there," adding that this was important in Europe where regulators from various countries talk to each other regularly. "The EU likes cable consolidation in Europe to give competition to telcos," he added. Malone described the Northern part of Western Europe as the core consolidation focus for Liberty Global.
Asked about Telenet in Belgium, in which Liberty Global recently raised its stake from 50.2 percent to about 58 percent, but failed to convince shareholders to sell it 100 percent, Fries said he feels good about the company's outlook. "Fifty-eight percent is not as good as 100 percent, but we're in control," he said. Added Malone: "But one day, the stars will align."
Asked how he feels about the Virgin Media deal today and if he had any worries, Fries said "there are no material issues we are concerned about. We are anxious to get our hands on the wheel." He also said that the merged company has a "really strong foundation for growth," and "we're feeling good about the whole thing."