Liberty Global, the US cable group owned by John Malone, is set to bid for the UK’s second-largest pay television operator Virgin Media with an enterprise value of more than $20bn.
A successful bid could give Liberty Global savings across its network in countries like the Netherlands, Germany, Switzerland and Chile if it includes the purchase of set-top boxes and other technology.
In addition, purchasing Virgin Media would put Liberty Global in direct competition with British Sky Broadcasting Group (BSkyB), which is controlled by Rupert Murdoch’s News Corporation.
Virgin Group’s Sir Richard Branson currently holds a 3 per cent equity stake in Liberty Global.
The phone-hacking scandal in November 2011 forced News Corporation to withdraw a bid for full control of BSkyB, Malone told the Financial Times that bankers had tried to “stir things up” but he would not bid against Murdoch for BSkyB.
“In all the transactions we have done with him he has had the greatest integrity, [so] I am not about to jump and give him a hard time,” he said then. But Malone said he “would love” to be in the UK, and argued that cable companies would gain market share from satellite platforms as internet video services grew.
Virgin Media, which generates most of its revenues through mobile offerings, is facing tough price competition from BSkyB and BT Vision in the UK pay-television market.
Liberty Global reported liquidity of $5.5bn, including $3.3bn in cash on its own books and at its parent company’s level for the third-quarter of 2012.
Meanwhile, Virgin Media’s shares listed on the Nasdaq closed at $38.69 on Monday.