John Malone’s Liberty Global acquired the UK’s Virgin Media in a $23B deal in June. In the past year, Britain’s No. 2 pay-TV operator has added 1,000 extra customer service roles while its rival, 21st Century Fox-controlled BSkyB, said in May that it plans to add 550 jobs to meet demand and serve a growing customer base. Now, Virgin is looking at streamlining its senior and middle management ranks with the possible axing of 600 positions. The cuts would amount to about 4% of the company’s workforce and are intended to “find the best shape” for Virgin and help build an “agile and efficient” organization, I’m told. After the acquisition by Liberty, Virgin CEO Neil Berkett exited the company and Tom Mockridge, coincidentally the former CEO of News Corp’s News International, came aboard to replace him. Regarding the job cuts, Mockridge said today, “Like organizations across the public and private sector, Virgin Media is making sure it has the structure it needs to meet the needs of its customers. These proposals are designed to take advantage of the opportunities that come with being part of the world’s largest cable operator and create an organization that’s fit for growth.”
The new arrangement with the UK cable company is a breakthrough for Netflix: It’s the first time the service, built on the Web, will appear alongside traditional cable channels on a pay TV service. Customers still need to pay extra for a Netflix subscription, but it will be accessed via an app for Virgin Media customers who use its set-top boxes from TiVo. It will first be offered to 40,000 Virgin Media TiVo households and will be available to all 1.7M by year end, according to the company that is owned by John Malone’s Liberty Global. Although the deal probably won’t result in a financial windfall for Netflix, its inclusion in a pay TV package “is an important shift in mindset, signifying that [Netflix] is viewed increasingly as another network and less as competition” for distributors, Janney Capital Markets analyst Tony Wible says. Since users can search Netflix offerings alongside traditional TV shows, he adds, “we expect to see higher utilization of the [Netflix] service, which we believe will come at the expense (at least in part) of traditional TV networks, particularly for lesser watched programming.” Investors apparently agree: Netflix shares are up nearly 4% in early trading to $306.
Britain’s BT has pacted with Liberty Global-owned Virgin Media to offer its nascent BT Sport package on Virgin’s UK pay-TV service. The move comes just in time for the British Premier League soccer season which kicks off this weekend. The wholesale deal more than triples the number of BT Sport viewers, bringing the total to about 3M for the three channels (Virgin’s XL subscribers will get the channels for free and lower tier subscribers will be able to purchase them for £15.) Both BT and Virgin compete with Sky, the UK’s dominant pay player. However, Virgin also offers Sky’s channels meaning that following today’s BT pact, it becomes “the only place sports fans can enjoy every goal, try, penalty and heart-stopping sporting moment,” Virgin said in a statement. Sky, meanwhile, is giving Britain a “free day of football” on Saturday when it makes Sky Sports available to every UK household. As a rule, BT offers BT Sport 1, 2 and ESPN HD for free to its broadband customers.
BT has steadily increased its position in the sports rights arena, outbidding ESPN for 38 live Premier League matches for each of the next three seasons in a £738M deal in 2012. (It has since acquired ESPN’s UK & Ireland TV businesses.) At the same time, Sky is paying £2.3B over three years for 116 live matches. Other players have tried and failed to take on Sky in the sports game, but some media watchers say BT isn’t necessarily eyeing a challenge to its supremacy in that domain.
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 …
The UK government and regulator, Ofcom, are taking the next steps to bring the Digital Economy Act’s mass notification system on copyright infringement into effect. After a court case slowed down the legislation, Ofcom’s new draft code is now expected to head to Parliament later this year. The code calls on ISPs to alert subscribers when their connection is suspected of being used to illegally share films or music. For now, the code covers ISPs with more than 400K broadband customers including BT, Everything Everywhere, O2, Sky, TalkTalk and Virgin. BT and Talk Talk had previously argued that it was not for them to police their customers, but they lost on appeal. ISPs will also be required to explain to subscribers how they can protect their networks and where they can find licensed content. Copyright owners in turn are expected to invest in awareness campaigns and develop “attractive online services to offer their content.” The government, for its part, has put secondary legislation before Parliament that would see the notification system paid for by rights holders with ISPs paying a smaller element.
The U.S. Public Broadcasting Service, long an importer of British fare, will attempt to return the favor starting Tuesday with the launch of PBS UK, the Wall Street Journal reports. The lineup includes U.S. flagship shows PBS News Hour and Frontline; the science series Nova; the U.S. version of Antiques Roadshow (format imported from Britain); and documentaries from director Ken Burns, whose Prohibition (pictured) will air on Day 1. It’s PBS’ first major foreign foray since the service was founded more than 40 years ago. PBS UK will air on Britain’s two biggest pay-TV platforms, British Sky Broadcasting and Virgin Media. It will be available to about 14 million viewers, roughly half the country’s TV audience. PBS is late to the party because it doesn’t have a lot of money. U.S. commercial networks such as MTV, Nickelodeon, Discovery and CBS have been in the UK for years. “The top priority is to get our content to an audience that I know is interested in the work we produce,” said PBS chief executive Paula Kerger.
BSkyB has for years held exclusive rights to the movies of the major Hollywood studios in the first subscription pay-TV window, the UK’s Competition Commission pointed out in a provisional report issued today, saying Sky’s large subscriber base is preventing rivals BT and Virgin Media from bidding successfully against Sky for these rights. BSkyB responded by saying it will cooperate with the the ongoing regulatory review but believes that no regulatory intervention is required.
“At the heart of the problem is Sky’s strong position in the pay-TV market, with twice as many subscribers to pay TV as all other traditional pay-TV retailers put together,” said Laura Carstensen, who headed the commission probe. Sky supplies some other pay-TV companies with its movie channels, but the industry watchdog said that prices charged for the service are too high. Consumers are paying up to $98M a year too much to see films on television as result of Sky’s dominance, the commission said. Subscribers to Sky’s 12 movie channels pay roughly $60 a month.