Euro cablers still at Liberty

Will Malone achieve his dream?

LONDON — Liberty Media’s acquisition of Dutch cabler Casema Aug. 1 boosted topper John Malone’s dream of building a pan-European cable empire, but it is still an open question whether the media mogul will succeed in his ambitions.

In the U.K., Liberty has backed off from its attempt to take control of troubled cable operator Telewest, to the relief of bondholders who did not want Malone in the driver’s seat when it begins to restructure its debt.

In Germany, Liberty is understood to be on the shortlist of five bidders for Deutsche Telecom’s cable assets. It’s promising but still a far cry from its earlier deal for the six regional systems, which was nixed by German regulators February.

The Casema deal is in a market where Liberty already has a strong presence through ownership of cabler United Pan-Europe Communications. Casema ups Liberty’s market share in Holland by at least 20% to something around 60%.

But Malone moves in mysterious ways.

In July, Liberty announced it was dropping its offer to buy 20% of Telewest’s bonds — which would have provided much-needed funding — and pulled its three representatives from Telewest’s board. Since then, Telewest chief exec and industry vet Adam Singer, who is very much Malone’s man, has been forced to exit.

But Liberty still owns 25% of Telewest and has acquired 11% of its bonds. It is also negotiating to buy Microsoft’s 23.6% stake in Telewest, which means Liberty will remain a major force within the company, regardless of what ensues.

With the players jostling for position, who will emerge as dominant in U.K. cable is anyone’s guess.

“Our view so far is that in the longer term (Malone) will win,” says Rebecca Ulph, an analyst with Forrester Research. “There’s a lot going on behind the scenes.”

NTL — Blighty’s other, bigger cable operator — completes debt restructuring in September.

When Telewest eventually does the same, the two will be well placed to merge, with debt reduced to manageable levels and much to be gleaned from harmonizing their operations.

It also seems likely that NTL’s chief exec, Barclay Knapp, who helped create the cabler’s financial malaise through aggressive acquisitions, will go. And Telewest’s new chief exec, Charles Burdick, who was the company’s finance director, would seem a stopgap solution to Telewest’s difficulties.

That could reopen the door for Singer — if he is interested — who is still considered a formidable creative exec by most industryites.

And while what happens in the German market is more of a crapshoot, Malone should be grateful that watchdogs stopped him from paying $5.4 billion for DT’s cable businesses: With technology in a profound slump, the current bids are thought to range from $2 billion to $3 billion.