Virgin Media facing Private Equity bid
# May 21, 12:54 PM by Mick
The Observer newspaper reported over the weekend that a private equity consortium, which is led by U.S based Providence Equity Partners, is considering making a $15 Billion approach for Virgin Media. The newspaper said that interest from the consortium, for the cable operator was revisited after Virgin Media announced its 2007 first quarter results which indicated the company had a fall in customers and that it may yet lose more customers.
According to a recent Financial Times report. Virgin boss, Sir Richard Branson, is said to be dissatisfied with the cable company’s strategic plan.
Virgin Media’s second largest shareholder, Franklin Mutual Advisers, with a 9.4 per cent stake, issued a filing to Securities and Exchange Commission, saying it wants talks with the board about Virgin Media’s strategic direction, corporate governance and management.
Virgin Media which used to be formerly known as ntl, has seen its debt swell since it bought out Telewest and Virgin Mobile. Coupled with customer losses last quarter and more losses being expected, its not looking at all well for Virgin Media at the moment.
It could be easy if this was the only issue to contend with, but it doesn’t end there. There is the Virgin, Sky spat which has seen Virgin Media announcing that it is taking BSkyb to court for its “alleged” anti-competitive behaviour.
According to the Media Guardian, James Murdoch recently wrote to Virgin Media’s CEO, Steve Burch and suggested to him that Virgin Media and Sky meet somewhere down the middle. In Feb, Virgin Media had refused to pay the Ãƒâ€šÃ‚Â£40 million asking price for the carriage of Sky’s basic channels, Virgin Media said it wouldn’t pay more than Ãƒâ€šÃ‚Â£30 million. So Murdoch, in his recent letter to Virgin Media’s Steve Burch, had offered the channels at Ãƒâ€šÃ‚Â£35 million, hoping for a straight forward solution.
But Mr Burch doesn’t appear to be having any of it by saying its “an extreme and anti-competitive price” – He said regarding Sky’s lower proposal that it “does not make it fair or lawful nor does it promote good faith discussions”.
Meanwhile, in other news today, BSkyb is said to be in talks with Tiscali, to allow distribution of its basic channels being aired to its 1.48 million broadband customers. Apparently, both parties are in ‘advanced talks’ and a major deal could be announced within weeks.