Liberty Global plc. (LBTYA - Analyst Report), a leading cable MSO (multi-service operator) in Europe, recently offered some concessions to ward off anti-trust regulatory body, European Union (EU) Competition Commission regarding its proposed takeover of Ziggo N.V., the largest cable MSO in the Netherlands. In Jan 2014, Liberty Globalhad reached an agreement to acquire a 100% stake in Ziggo.
As part of the concessions offered, Liberty Global has decided to vend its pay-TV channel “Film1.” Furthermore, the company will not prevent online video streaming service providers from accessing its web (Internet) network for the next four years either contractually or technically.
Low-cost online video streaming service providers depend completely on Internet links for their offerings. The regulatory body is likely to take into consideration the feedback of third parties on the terms of the concessions.
At present, Liberty Global holds a 28.5% stake in Ziggo. Notably, the company will pay around $13.6 billion to acquire the remaining 71.5% stake in Ziggo including its outstanding debt. The deal will be completed through a stock and cash transaction.
The EU regulatory body is currently evaluating the deal and has expressed its concern over the impact the merger will have on the Netherlands’ cable TV industry and on the Flemish-speaking areas of neighboring Belgium. The EU deadline for a decision on the deal is Oct. 17, 2014.
Liberty Global boasts a strong presence in the Dutch cable TV market as its UPC Broadband Holding BV unit is the second largest cable MSO in the nation.A merger between Liberty Global and Ziggo will create a dominant cable TV operator in the Netherlands with approximately 10.8 million revenue generating units. Ziggo also competes with telecom operators such as Royal KPN N.V. and Vodafone Group plc. (VOD - Analyst Report).
Liberty Global is striving to extensively penetrate the European region with its bundled video, voice and Internet (data) services. The company has also joined the RDK Management LLC., a joint venture between U.S. cable giants Comcast Corp. (CMCSA - Analyst Report) and Time Warner Cable Inc. (TWC - Analyst Report).
In 2013, Liberty Global acquired the license to test RDK standard on its next-generation Horizon IP video gateways. Liberty Global currently carries a Zacks Rank #3 (Hold).