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Liberty Global may bid for Virgin Media

July 31, 2007|From Bloomberg News

John Malone's Liberty Global Inc., the largest owner of cable television systems outside the U.S., said Monday that it might bid for Virgin Media Inc., the second-biggest British pay-TV company.

"We see it as our duty to evaluate all opportunities in broadband cable, including this one," said Bert Holtkamp, a spokesman in Europe for Englewood, Colo.-based Liberty Global.

Liberty Global, which owns the UPC broadband and TV service in Europe, is the second potential bidder and the first cable company to express an interest in Virgin Media, based in Hook, England. This month, Virgin Media put itself up for sale and said its bankers at Goldman Sachs Group Inc. would evaluate an offer that had been received and would carry out a wider review of options.

"Liberty has a substantial expertise in running cable businesses and that would be important for Virgin Media," said Chris Wynn, a London-based analyst at research firm Informa Telecoms. "It's a very strong asset and this shows it's not the case where it will just be private equity players now."

Although Virgin Media declined to say which company had bid, two people with knowledge of the talks said July 2 that Carlyle Group approached Virgin Media about a possible $10.8-billion bid.

Shares of Virgin Media rose $1.02, or 4.1%, to $25.72, giving the company a market value of $8.42 billion. Liberty Global shares rose 54 cents, or 1.3%, to $41.41.

In May, Virgin Media posted its seventh straight quarterly loss as subscribers continued to defect to bigger competitor British Sky Broadcasting Group. Virgin Media, which counts billionaire Richard Branson as its third-biggest shareholder, is in two disputes with BSkyB, where Rupert Murdoch is chairman.

BSkyB bought an 18% stake last year in British broadcaster ITV, blocking a bid by Virgin Media for the company. Branson said BSkyB's media influence was "verging on dangerous" and said Murdoch was a "threat to democracy."

In March, some BSkyB channels were dropped from Virgin Media's system after the two companies failed to agree on terms to extend their deal. Virgin Media sued BSkyB a month later, saying it took advantage of its dominance in the media.

"In the past, we have not shown that much interest in the U.K. because of Sky's dominant role," Holtkamp said.

Liberty, a "consolidator in cable," looks at all such assets, he said.

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