Broadcast: Liberty eyes further deals

Story from Broadcastnow.

Liberty Global plans to use its £10bn acquisition of Virgin Media as a springboard for more deals in Europe, as it steps up plans to boost customer numbers.
President and chief executive Mike Fries, who celebrated his 50th birthday this week, said it had been looking to acquire Virgin Media for some time as part of its strategy of increasing its European footprint in the strongest and most stable markets.

“There are still several M&A opportunities across Europe,” he said. “We’ve refrained from using the phrase ‘the largest cable operator’, but we will be bigger than Comcast and twice the size of Time Warner.” The move gives the company a larger footprint across Europe and means it will be easier to handle regulatory issues.

The deal will also give it increased access to the capital markets, which will help drive M&A business in Europe.

It means that Liberty Global is the largest cable operator in nine of the 12 European countries in which it operates and nearly 80% of its revenues will come from five markets: Belgium, Germany, Switzerland, the Netherlands and the UK.

The company is targeting around $180m (£115m) annual synergies, including cost savings of $110m from IT support and procurement and $70m of capex saving derived from increased scale. But the deal will not be followed by Liberty splashing out on other UK broadcasters and Fries ruled out a bid for free-to-air broadcaster ITV.

“We have not thought about that at all,” he said. “I do not anticipate any meaningful M&A activity in the UK market for some time.”

Nor will Liberty battle BSkyB and BT Sport for Premier League or other significant sports rights.

“Virgin Media’s approach to the TV business is solid. It hasn’t been pursuing a premium content play and we think that’s right for Virgin Media,” Fries said.

Chairman John Malone, who has faced News Corp boss Rupert Murdoch on a number of occasions, said he was looking forward to increased competition with News Corp-backed BSkyB. “Relations with Sky are important to us. We have a long history of competitiveness with News Corp and we look forward to this,” said company founder Malone.

“There’s no question that the UK is competitive but demand for services is strong. Everyone who does a good job will do well.”

Virgin Media chief executive Neil Berkett will step down after the transaction, but Fries said it had not started the process of finding a replacement.

The company is keen to retain key senior executives. “We are hopeful we can retain all of Neil’s team,” he added.