When Vodafone completed its €7.7 billion acquisition of Kabel Deutschland last year it set in motion a series of conversations at the highest levels of the cable industry.
We hear about them in the financial pages of our newspapers – described as “sources familiar with the situation” or a “person with knowledge of the transaction”, but if truth be told nothing is settled until the ink dries on the paper.
Details of Liberty Media’s courtship of Virgin Media later revealed a six-month process that began with a social event in August 2012, when Aryeh Bourkoff, CEO of investment bank LionTree, invited Virgin Media chairman James Mooney and Liberty Global CEO Mike Fries to join him for the evening.
Those conversations led to the stock and cash merger between Virgin and Liberty Global valued at €18.26 billion. The purchase of Ziggo announced this week comes in at €10 billion – note this is more than KDG – and may see the departure of the UPC brand from Dutch cable homes. As with Virgin it is deemed to be the stronger brand – and actually familiar to more Dutch households than UPC itself. As with Virgin and TiVo the next question to be asked in the Netherlands will involve Horizon and Ziggo’s own multiscreen service that it has implemented on much of its installed base.
This brings us back to our mysterious investor friends. The past few years have seen the private equity firms that have largely held European cable stocks either sit back or grow their investments. Money has been spent on improving the infrastructure or the consumers’ lot.
With the arrival of Netflix and other such OTT services on the landscape there has really been no other choice.
Vodafone has been an interesting suitor because despite a few attempts it is one of the big telcos that does not have a viable TV operation – at least not until its entry into Kabel Deutschland. BT, O2 (Telefonica), Deutsche Telekom, Telenor and Telia, all have TV to play with.
The question now is who among them wants to grow that business and who are their targets.