LONDON — Microsoft is reportedly in talks to acquire a 30% stake in Cable & Wireless Communications, a deal that would give the software giant a share in all three of the U.K.’s cable operators at a time when the industry is moving toward consolidating into a single, powerful entity.
This raises the prospect of Bill Gates pitted against Rupert Murdoch in Britain’s multichannel TV market and, most importantly, the growth of digital TV. News Corp.-controlled satcaster British Sky Broadcasting (40%) is the U.K.’s dominant multichannel player.
CWC, the U.K.’s biggest cable TV company, parented by the British telco Cable & Wireless, refused to comment in detail on the speculation, only saying it regularly talks to Microsoft on a variety of issues. Microsoft’s offer for the stake in CWC is valued at more than $4 billion.
CWC is already in merger talks with rival Telewest, in which Microsoft picked up a 29.9% stake last week as part of its deal with AT&T. The software giant also paid $500 million in February for 5% of NTL, No. 3 among British cablers.
The U.K. cable industry is poised to launch its digital TV platforms over the coming months. BSkyB’s service, SkyDigital, launched last fall and already has over 550,000 subscribers.
Some observers contended that cable could be a stronger rival to SkyDigital than ONdigital, a digital terrestrial platform parented by the ITV companies Carlton and Granada, also launched late last year.
Cable’s broadband capacity will allow it to offer at least as many channels as Sky — currently 164, including audio (ONdigital accesses 30 TV channels) — as well as interactive, Internet and telephony services, something BSkyB is adding to the SkyDigital package.