Five questions answered on the sale of Virgin Media to Liberty Global

Birth of the world’s biggest broadband company.

Today it has been announced that Liberty Global will buy Richard Branson’s Virgin Media. We answer five questions on the two companies impending merger which will create the world’s biggest broadband company.

What is Liberty Global?

Liberty Global is an international media company and one of the largest broadband providers outside the US, operating in 13 countries, including Germany and Belgium.

John Malone is the company’s chairman who has had a long standing rivalry with Rupert Murdoch, who he clashed with in 2001 when News Corp and Liberty Global vied for control of DirecTV Group, the largest US satellite TV broadcaster.

How much has Liberty Global agreed to buy Virgin Media for?

In a cash and stock deal the company will pay $23.3bn (£15bn) to the UK Virgin Media company.

Shareholders in Virgin Media will recieve $47.87 a share, with $17.50 in cash and the rest in Liberty Global shares.

As part of that deal Sir Richard Branson retains a 3 per cent stake in the company, which has a 30-year brand licensing agreement with his Virgin Group.

The merger is subject to shareholder and regulatory approvals.

How does the deal fit into the wider context of the broadband/ pay-TV industry?

The merger will create the world’s biggest broadband company, with 25 million customers in 14 countries, and puts Malone in direct rivalry with Rupert Murdoch, whose media empire owns 39 per cent of BSkyB. The merged company will also be the second biggest pay-TV business after BSkyB in the UK.

Virgin Media was originally created from the merger of NTL and Telewest, and Sir Richard Branson's Virgin Mobile in 2006.

It is thought that Liberty Global will keep the Virgin Media branding.

What has Liberty Global said about its merger with Virgin Media?

Mike Fries, President and CEO of Liberty Global, in a press release statement said: “Adding Virgin Media to our large and growing European operations is a natural extension of the value creation strategy we've been successfully using for over seven years.

“After the deal, roughly 80 per cent of Liberty Global's revenue will come from just five attractive and strong countries - the UK, Germany, Belgium, Switzerland and the Netherlands.

"Like all of our strategic acquisitions we expect this combination to yield meaningful operating and capex synergies of approximately $180 million per year upon full integration.”

What has Virgin Media representatives said?

Virgin Media CEO Neil Berkett said: “Over the past six years, Virgin Media has transformed the digital experience of millions of customers, catalyzed a deep-rooted change in the UK’s digital landscape and delivered impressive growth and returns for our shareholders. I’m confident that this deal will help us to build on this legacy.

“Virgin Media and Liberty Global have a shared ambition, focus on operational excellence and commitment to driving shareholder value. The combined company will be able to grow faster and deliver enhanced returns by capitalizing on the exciting opportunities that the digital revolution presents, both in the UK and across Europe.”

Photograph: Getty Images

Heidi Vella is a features writer for Nridigital.com

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Who really controls the Labour Party now?

Jeremy Corbyn's allies will struggle to achieve their ambition to remove general secretary Iain McNicol.

Jeremy Corbyn's advance at the general election confirmed his place as Labour leader. Past opponents recognise not only that Corbyn could not be defeated but that he should not be.

They set him the test of winning more seats – and he passed. From a position of strength, Corbyn was able to reward loyalists, rather than critics, in his shadow cabinet reshuffle. 

But what of his wider control over the party? Corbyn allies have restated their long-held ambition to remove Labour general secretary Iain McNicol, and to undermine Tom Watson by creating a new post of female deputy leader (Watson lost the honorific title of "party chair" in the reshuffle, which was awarded to Corbyn ally Ian Lavery).

The departure of McNicol, who was accused of seeking to keep Corbyn off the ballot during the 2016 leadership challenge, would pave the way for the removal of other senior staff at Labour HQ (which has long had an acrimonious relationship with the leader's office). 

These ambitions are likely to remain just that. But Labour figures emphasise that McNicol will remain general secretary as long he retains the support of the GMB union (of which he is a former political officer) and that no staff members can be removed without his approval.

On the party's ruling National Executive Committee, non-Corbynites retain a majority of two, which will grow to three when Unite loses a seat to Unison (now Labour's biggest affiliate). As before, this will continue to act as a barrier to potential rule changes.

The so-called "McDonnell amendment", which would reduce the threshold for Labour leadership nominations from 15 per cent of MPs to 5 per cent, is still due to be tabled at this year's party conference, but is not expected to pass. After the election result, however, Corbyn allies are confident that a left successor would be able to make the ballot under the existing rules. 

But Labour's gains (which surprised even those close to the leader) have reduced the urgency to identify an heir. The instability of Theresa May's government means that the party is on a permanent campaign footing (Corbyn himself expects another election this year). For now, Tory disunity will act as a force for Labour unity. 

George Eaton is political editor of the New Statesman.

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