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Virgin Media in Talks With Liberty Global

05/02/2013 12:30pm

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LONDON--U.K. cable-television and Internet provider Virgin Media Inc. said Tuesday that it is in talks with international cable operator Liberty Global Inc. about a possible tie-up, which would shake-up the U.K.'s pay-TV and Internet market.

Virgin Media is the U.K.'s second-largest pay TV operator with close to five million customers, competing against market leader British Sky Broadcasting Group PLC and BT Group PLC's pay-TV offering, BT Vision.

A deal would also put telecommunications billionaire John Malone--who is chairman of Liberty Global--up against his former business partner and rival Rupert Murdoch. Mr. Murdoch is chairman of News Corp., BSkyB's biggest shareholder with a 39.1% stake.

Virgin Media confirmed it was in discussions with Liberty Global "concerning a possible transaction" without detailing what form any deal would take. A Virgin Media spokeswoman declined to comment beyond the company's brief statement.

A Liberty Global spokesman declined to comment on its plans.

Liberty Global is based in Englewood, Colorado but focuses on markets outside the U.S. with broadband networks in 13 countries, mainly in Europe.

A deal with Virgin Media would be the latest attempt by Liberty Global to increase its presence in Europe. Last month the company raised its stake in Belgian cable operator Telenet Group Holding NV to 58% and in 2011 it bought German cable provider Kabel Baden-Wuerttemberg for roughly $4.5 billion. It also owns KBW's larger rival Unitymedia.

Liberty Global operates separately from Mr. Malone's U.S.-focused content business Liberty Media Corp., which owns the Starz premium-movie channel.

Liberty Media was a large shareholder in News Corp. until 2008 when it exchanged its 16% stake in News Corp. for News Corp.'s 41% stake in U.S. satellite TV operator DirecTV. News Corp. also owns Dow Jones & Co., publisher of Dow Jones Newswires and The Wall Street Journal.

Sam Hart, media analyst at U.K. stockbroker Charles Stanley, said a combined company would pose a "stronger competitive threat" to BSkyB, which at the moment is "leaps ahead of the competition in terms of its financial strength and ability to bid for various content rights in sport and movies."

A deal would also allow the enlarged group to invest in new technology, another area where BSkyB is the most proactive, he added.

A spokesman for BSkyB wasn't available to comment.

Virgin Media had 4.85 million cable customers at the end of September, compared with BSkyB's 10.33 million TV customers at the end of December, according to company filings.

Even though Virgin Media operates solely in the U.K., its primary listing is on the Nasdaq Stock Market in the U.S., a legacy of its creation in 2006 from the merger between NTL and Telewest.

Virgin--whose combined TV and broadband interactive platform is powered by TiVo, the set-top box that is popular in the U.S.--is expected to publish its 2012 financial results on Wednesday.

Write to Lilly Vitorovich at

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