Liberty topper downplays Murdoch, Malone showdown

LONDON — Virgin Media CEO Neil Berkett said Wednesday he plans to ankle when Liberty Global concludes its planned $23.3 billion takeover of U.K. cable operator Virgin Media and Liberty CEO Mike Fries downplayed the deal as a showdown between Rupert Murdoch and John Malone.

The moguls will run the number one and two Brit pay TV players in BSkyB and Virgin ?although Virgin is much smaller. “Listen, that’s a great headline,” Fries said, but the companies share content and the two men are good friends. “This is all about economics and pricing stability, he told Bloomberg Television. Fries also clarified that Liberty Global is a separate, publicly traded company from Malone’s holding Liberty Media.

“All we share is a chairman (Malone) and an office building” in Denver, he said. But given Malone’s historically hands-on approach to all his business interests that isn’t likely to quell speculation.

Berkett, who could reportedly pocket $30 million from the sale to Liberty, said in a conference call that he would remain associated with Virgin in an advisory capacity during the transition, but that long-term he was “not a very good number two.”

Liberty Global prexy and CEO Mike Fries said he would quickly begin the search for a successor to Berkett.

Fries also rubbished speculation that Liberty might now consider a bit for ITV, the U.K. free-to-air commercial web in the throes of a transformation plan, and which in 2007 was the focus of a hostile bid by Virgin.

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

The takeover of Virgin is expected to win stockholder approval in the next 90 days.

While the deal will establish Liberty as the world’s biggest broadband communications company, covering 47 million homes and serving 25 million customers across 14 countries, analysts appear divided on what impact it is likely to have on the U.K. pay TV arena.

Ted Hall, senior analyst at Informa Telecoms & Media, predicted “a new headache” for Blighty’s dominant pay box BSkyB, contolled by Rupert Murdoch’s News Corp, which has 10.5 million subscribers compared to Virgin’s four million.

He said: “In entering the U.K., Liberty would be taking on one of the most feared competitors in all of pay-TV, BSkyB, with the renewal of an on-off rivalry between Liberty chairman John Malone and former business partner and News Corp chief Rupert Murdoch providing an interesting subplot.

“Sky is no stranger to facing a new competitor – currently fending off a fledging challenge from Netflix, for instance – but it will have some concerns about what Liberty could bring to the table.”

But Mathew Horsman, director of media consultancy Mediatique, played down any coming pitched battle between Malone and Murdoch in Blighty

“It doesn’t read that way at all to me,” he said. “The most significant aspect is to do with the standardization of set-top box technology which is likely to result from the Liberty takeover.

“There may be content implications, but Europe-wide deals for sports and movies are very complicated.

“Is in transformative for the U.K. pay TV market? No is the simple answer.”

Jill Goldsmith contributed to this story

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