By Lilly Vitorovich, Dana Cimilluca and Anupreeta Das
John Malone's international cable business Liberty Global Inc.
(LBTYA) is close to a deal to buy U.K. cable-television and
Internet provider Virgin Media Inc. (VMED), which could create a
stronger competitor to market leader British Sky Broadcasting Group
PLC (BSY.LN).
The boards of the two companies were meeting Tuesday to discuss
a takeover of Virgin Media by Liberty Global, which could be
announced Wednesday if not sooner, according to people familiar
with the matter.
Virgin Media, the U.K.'s No. 2 pay TV operator with close to 5
million customers, confirmed Tuesday that it is in talks with
Liberty Global "concerning a possible transaction" without
detailing what form any deal would take. A Virgin Media spokeswoman
declined to comment beyond the company's brief statement.
A Liberty Global spokesman declined to comment on its plans.
The deal would come less a month after Liberty Global raised its
stake in Belgian cable operator Telenet Group Holding NV (TNET.BT)
to about 58% after failing to take full ownership. While Liberty
Global is based in Englewood, Colo., it focuses on markets outside
the U.S. with broadband networks in 13 countries, mainly in Europe.
Liberty Global bought German cable provider Kabel
Baden-Wuerttemberg for roughly $4.5 billion in 2011 and owns KBW's
larger rival Unitymedia.
A deal would also put telecommunications billionaire Malone--who
is chairman of Liberty Global--up against his former business
partner and rival Rupert Murdoch, chairman of News Corp. (NWS),
BSkyB's biggest shareholder with a 39.1% stake.
As well as BSkyB, Virgin Media competes against BT Group PLC's
(BT) pay-TV offering BT Vision.
Liberty Global operates separately from Mr. Malone's
U.S.-focused content business Liberty Media Corp., which owns the
Starz premium-movie channel.
Liberty Media was a large shareholder in News Corp. posing a
potential threat to the Murdoch family's control of the group,
until 2008, when it exchanged its 16% stake in News Corp. for News
Corp.'s 41% stake in U.S. satellite TV operator DirecTV.
News Corp. also owns Dow Jones & Co., publisher of Dow Jones
Newswires and The Wall Street Journal.
Sam Hart, media analyst at U.K. stockbroker Charles Stanley,
said a combined company would pose a "stronger competitive threat"
to BSkyB, which is "leaps ahead of the competition in terms of its
financial strength and ability to bid for various content rights in
sport and movies."
A deal would also allow the enlarged group to invest in new
technology, another area where BSkyB is the most proactive, he
added.
A spokesman for BSkyB declined to comment.
Virgin Media had 4.85 million cable customers at the end of
September, compared with BSkyB's 10.33 million TV customers at the
end of December, according to company filings.
Even though Virgin Media operates solely in the U.K., its
primary listing is on the Nasdaq Stock Market in the U.S., a legacy
of its creation in 2006 from the merger between NTL and
Telewest.
Virgin--whose combined TV and broadband interactive platform is
powered by TiVo, the set-top box that is popular in the U.S.--is
scheduled to publish its 2012 financial results on Wednesday.
Write to Lilly Vitorovich at lilly.vitorovich@dowjones.com, Dana
Cimilluca at dana.cimilluca@wsj.com and Anupreeta Das at
anupreeta.das@dowjones.com
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