TMCnet Feature
April 17, 2013

European Commission Approves Virgin Media's Acquisition by Liberty Global of the U.S.

By Joe Rizzo, TMCnet Contributing Writer

The European Commission (EC) is the executive body of the European Union (EU) and are responsible for proposing legislation, implementing decisions, upholding the EU’s treaties as well as the day-to-day running of the EU.

The EU is an economic and political union of 27 member states and are primarily located in Europe. The EU has developed a single market through a standardized system of laws that apply to all member states.

On April 15, 2013, the European Commission released a press announcement from Brussels. Under the EU Merger Regulation, the EC has cleared the proposed acquisition of UK cable operator Virgin Media, Inc. It is registered in the U.S. by the U.S. based company Liberty Global, Inc. (News - Alert)

The acquisition would combine the second largest Pay TV operator in the UK (Virgin Media) with the largest cable operator in Europe (Liberty Global). The price tag (News - Alert) for this transaction is 17.2 billion Euros or $22.64 billion.

According to the press release, the Commission investigated the vertical link between Liberty Global's activities in the wholesale supply of Pay TV channels, which include the Extreme Sports Channel, CBS Reality, Horror Channel, and others and Virgin Media's (News - Alert) activities in the acquisition of these channels and the retail of Pay TV services to customers in the UK.

The Commission concluded that the merged entity is not likely to shut out competing Pay TV retailers by withholding its TV channels from them. This is due to its very limited presence in the wholesale supply of TV channels and the incentive to license its TV channels as broadly as possible.

Similarly, it is also not likely that the merged entity would shut out competing TV channel broadcasters from access to the retail Pay TV market, given the number of alternative distribution platforms to Virgin Media’s cable network and the importance of offering a large variety of TV channels in order to attract Pay TV subscribers.

In the acquisition both Liberty Global and Virgin Media acquire audio visual content. These include individual TV programs as well as entire TV channels. In turn, they then offer them to their subscribers.

The Commission made an extensive examination of the market for the acquisition of TV content in the UK, Ireland and the European Economic Area (EEA). The conclusion was that the proposed acquisition would not restrict competition in these markets. Since TV content is licensed mainly on a national basis or for linguistically homogeneous areas, and because the merged entity would still face sufficient competitive constraint from other players, such as TV content providers and competing Pay TV retailers.

The Commission concluded that the transaction would not raise completion concern and therefore, approved the proposed acquisition.

Edited by Ashley Caputo
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