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Liberty Media’s Purchase of Virgin Media Has SVOD Implications

5 Feb, 2013 By: Erik Gruenwedel

Liberty Global to acquire Virgin Media in a stock and cash deal valued at approximately $23.3 billion.

Liberty Media recently spun off Starz LLC, the premium TV channel operator and creator of the “Spartacus” and “Magic City” original series.

“Virgin Media will add significant scale and a first-class management team in Europe’s largest and most dynamic media and communications market,” Mike Fries, Liberty Global’s president and chief executive, said in a statement.

Richard Branson is a minority owner of Virgin Media.

While much of the media speculates the possible transaction signals Liberty’s John Malone's interest in taking on Rupert Murdoch’s satellite-TV operation BSkyB in the battle for broadband, mobile, voice and pay-TV subscribers in the United Kingdom, Adrian Drury, principal analyst at Ovum, said a deal could impact the burgeoning subscription video-on-demand market as well. This means Netflix and Amazon’s LoveFilm Instant, which both have staked out SVOD beachheads in the region. Netflix claims to have more than 1 million subs in the United Kingdom.

“Malone will bring the operational smarts from cable operations in 13 markets, multi-territory leverage with the major studios and sports federations, plus its recently launched Horizon next-generation pay-TV and multiscreen platform, now rolling out across its European operations,” Drury wrote in a note.

The analyst said BSkyB is one of the best-run pay-TV operations, with a strong technology platform strategy and powerful content rights, including exclusive rights to the entire HBO catalog and exclusivity on the output of all of the majors in the SVOD window.

“The U.K. is a must-win market for LoveFilm and Netflix,” Drury wrote. “If Malone closes the deal, this will be a very interesting competition to watch and real test for the Liberty vision of the future of cable TV and internet services.”

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