Liberty for Europe

Cabler takes shared stake in UnitedGlobalCom

Expanding its European cable presence, Liberty Media Corp. on Tuesday acquired a stake in global communications provider UnitedGlobalCom Inc. for $493 million in cash to form a content and distribution cable venture with Microsoft Corp. and United Pan-Europe Communications.

As part of the UnitedGlobalCom deal, Liberty will purchase 4.93 million shares from Apollo Cable Partners, and the balance from Larry F. and Larry J. DeGeorge.

It plans to assign 50% of the shares to Microsoft. Both Liberty and Microsoft would then form a joint venture with UPC, which is already 60% owned by parent company United.

Acquisition, along with additional soon-to-be purchased shares, will give the three players a total 14.5% stake in United.

On board

Upon completion, John Malone, Liberty chairman, and Gregory Maffei, chief financial officer of Microsoft, will join United’s board of directors.

UPC’s CEO Mark Schneider said the deal with Liberty and Microsoft “adds strategic value to our media, Internet and content opportunities in Europe and strengthens the bond between UPC and its parent company.”

UPC has also taken a 13% stake in pan-European broadcaster SBS Broadcasting and formed a wide-ranging alliance that includes program-buying and possible channel-launching ventures across western and eastern Europe with SBS, which has cable, satellite and terrestrial channels in 10 Euro markets.

UPC, the largest private cable company in Europe, is placing itself at the forefront of the broadband revolution through the introduction of video, voice and Internet across all territories in which it is present.

More stakes

UPC has cable and Internet-related investments in 12 European countries, and is eyeing stakes in Switzerland’s Cablecom and in Deutsche Telecom’s regional cable systems.

Microsoft, which is also eyeing stakes in DT, owns 7.8% of UPC stock. Microsoft and Liberty have a 29% and 21% stake respectively in the U.K.’s Telewest Communications.

Other U.S. companies breaking barriers in the cable market in Europe include NTL, which has a stake in TeleWest. Between UPC, NTL and Intercomm, U.S. companies now control some 17% of the French cable market. Over the past year, Microsoft has invested in several European cablers, including UPC, NTL, Tele-west Communications, and TV Cabo to include its Windows CE operating system in future set-top boxes.

Liberty owns stakes in Discovery Communications, QVC and USA Networks, and is seeking more outlets to increase the audience for its programming.