In a further sign of John Malone’s increasing European cable ambitions, Liberty Global has acquired a 12.65% stake in Dutch operator Ziggo. It’s paying 632.5M euros ($810M) for the minority stake in the Netherlands’ biggest cable company that serves around 3M households. Liberty Global is already in the Dutch cable TV business via its subsidiary UPC, the area’s second largest provider. Global said today that it considers the acquisition of the minority Ziggo stake as “an attractive opportunity to make a strategic investment in a market where it already enjoys a sizeable presence.” Earlier this month, Liberty Media agreed to pay $2.62B For 27.3% of Charter Communications in the U.S. and in February, Liberty Global said it would acquire the UK’s Virgin Media in a stock and cash deal valued at approximately $23.3B.
John Malone’s back in the U.S. cable business. His Liberty Media has agreed to pay $95.50 a share for most of the stakes in Charter currently owned by Apollo Management, Oaktree Capital Management and Crestview Partners. (Crestview will hang on to 7.4% of Charter and Oaktree will keep 2.2%.) The transactions likely will close “in the first half of the second quarter” of this year, the companies say. When that happens Liberty will control four seats on Charter’s board: They’ll be held by Liberty chairman Malone, Liberty CEO Greg Maffei, Liberty Global CTO Nair Balan, and Barnes & Noble CFO Michael Huseby. But Liberty can’t take over Charter just yet. Malone’s company agreed not to up its stake in Charter beyond 35% until January 2016 and after that must stay below 39.99%. Malone was considered the king of cable in the U.S. until 1999 when he sold Tele-Communications Inc — the dominant operator at the time — to AT&T. Charter had about 4M video subscribers at the end of 2012, making it the No. 4 cable operator.
Charter shares jumped 10% yesterday, to $98.04, when word of the deal leaked, and are up an additional 1% this morning. Liberty was up 3.8% yesterday and a little under 1% this morning. “Our initial read is that this is OK for Liberty, Sirius, and other assets in Liberty’s portfolio, although we await additional detail on the ‘new loan arrangements’ used to finance the transaction,” Lazard Capital Markets’ Barton Crockett says.
Here’s today’s announcement:
Liberty Media CEO Greg Maffei, whose company owns about 17% of Barnes & Noble, doesn’t seem impressed by this week’s disclosure by the book store chain’s founder Leonard Riggio that he may try to buy its …
ITV, the UK’s leading commercial web (and home to Downton Abbey) has been the subject of takeover chatter in the past year, but renewed talk set the market abuzz on Friday and today. The stock rose as much as 3.3% in London trading today, after already jumping 3% at the end of last week. Shares closed at 120.3 pence this afternoon. The hikes come as Citigroup put the company on a list of European firms that could become takeover targets or begin share buybacks. Nomura also reiterated its buy recommendation, according to Bloomberg. Liberty Global’s move to acquire Virgin Media in a $23.3B merger earlier this month has fueled takeover talk in the sector and private equity groups are thought to be the most likely suitors in the event of a move on ITV. But, other media groups have been mentioned as potential bidders including RTL, NBC, Mediaset and Time Warner, The Guardian reports. According to The Evening Standard, traders have also suggested ITV could attract interest from TV and music mogul Simon Cowell and retail billionaire Sir Philip Green.
UPDATE 5:21 PM: Liberty Global and Virgin Media confirmed late today that Liberty will acquire Virgin Media. Here’s the release:
ENGLEWOOD, Colo.–Liberty Global, Inc. (“Liberty Global”) (NASDAQ: LBTYA, LBTYB and LBTYK) and Virgin Media Inc. (“Virgin Media”) (NASDAQ: VMED; LSE: VMED) today announced that they have entered into
This would be John Malone’s most ambitious effort to become a media power in the UK, the Financial Times says — noting that “several people familiar with the situation” believe a bid “could be announced in the …
Liberty Media Chairman John Malone just consolidated his power at the satellite radio company as four people friendly to his outlook joined the Sirius XM board replacing former CEO Mel Karmazin — who left last month …
Shares appreciated 9% to $15.69 in the first week after Liberty Media spun Starz off as an independent company. But its debut was also greeted by analyst reports that raised concerns about its prospects. Barclays Equity Research’s Chris Merwin initiated coverage today with an “equal weight” rating, and $15 price target. He fears that the premium pay TV network company won’t find a buyer or partner soon, and could soon see its profit margins shrink. Outlays for original programming will rise: Starz could have as much as 60 hours of originals in 2014, up from 38 hours this year — potentially raising next year’s production costs by 20% to $241M — the analyst says. In addition, execs soon will have to start negotiating to extend Starz’ movie carriage deal with Sony, which expires at the end of 2016. That could be costly. Starz needs Sony more than ever now that Disney has said it will move its films to Netflix beginning in 2016. And Merwin predicts that “other bidders, particularly Netflix and Amazon, could make competitive offers” for the studio’s films.
The stock is up more than 2% in early trading with investors more surprised at the timing of the announcement than by the decision itself. The satellite radio company says it will repurchase $2B in stock, with no timetable. Liberty Media, which owns 49.8% of Sirius XM, will participate in a way that ensures the effort doesn’t boost or dilute its stake. In addition, on December 28 Sirius XM will pay a 5 cent-a-share special dividend — about $325M — to those who own the stock on December 18. The general feeling was that Sirius XM would return cash to shareholders soon, but not yet: It’s still negotiating to determine the royalty rates it will have to pay for the music it airs, and looking at candidates to replace CEO Mel Karmazin when he leaves in February. The FCC could formally rule by year end that Liberty owns Sirius XM and its satellite licenses. But a lot of companies, including Disney and Dish Network, are announcing dividends ahead of the end of the year: If lawmakers can’t avoid the so-called fiscal cliff tax and budget measures that take effect in January, then dividends will be taxed at a much higher rate.
That’s one of several questions swirling in financial circles about Netflix’s new agreement to license the pay TV rights to Disney movies beginning in 2016. But there’s wide agreement that the outlook for Starz just became a little dimmer. The Disney movies it currently licenses constitute some of its most popular programming. “Approximately half of its content output comes from [Disney],” ISI Media’s Vijay Jayant says. “The Starz originals are not yet in a position to make up for the loss of [Disney] content, and we suspect that it will drive a further deceleration of the Starz business fundamentals.” That worrisome news comes at a sensitive time for Starz: Its parent, John Malone’s Liberty Media, is about to spin the premium TV channel off into a separate, publicly traded company. Malone hinted that it might become takeover bait, saying that “everybody can use a big brother.” Lazard Capital Markets’ Barton Crockett just cut his price target for Liberty by $8 to $134 noting that the Netflix-Disney pact raises “more questions about the long-term viability of Starz.”
Investors share the analysts’ concerns: Liberty Media stock fell 4.9% following the disclosure of Disney’s deal with Netflix. The Street also believes that the agreement is great for Netflix: Its shares popped 14%. (Disney was merely +0.02%.)
UPDATE, 11:56 AM: Liberty Media chairman John Malone finally took on the big question for Starz as his company prepares to spin it off: In a Q&A session at the end of Liberty’s Investor Day presentations, he indicated that once the premium cable network company is independent it likely will decide to sell itself to another company. “Everybody can use a big brother,” Malone says. “There are substantial synergies for Starz working together with various potential media partners. Certainly one of the opportunities is for [CEO Chris Albrecht] and the board to explore other relationships….Liberty can’t provide Starz with much in the way of operational synergies in the U.S.”
PREVIOUS, 10:52 AM: Starz’s new slogan is “Starz: Taking You Places,” CEO Chris Albrecht told Liberty Media investors today at the company’s annual gathering to review its holdings. Liberty CEO Greg Maffei says execs expect a spinoff to take place by year end.