Liberty Global CEO on Virgin Media Acquisition
Liberty Global CEO Michael Fries on the company’s deal with Virgin Media.
- Duration 6:48
- Date Feb 6, 2013
Liberty Global CEO Michael Fries on the company’s deal with Virgin Media.
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-- the world's largest cable company has just been born -- And it involves a virgin how about that the UK's Virgin Media being acquired by Liberty Global the US cable giant with many properties in Europe.
But up until now.
Nothing in the UK Virgin Media stopped really jump -- the past few days established a bit today but.
All the speculation of the sixteen billion dollar cash stock deal Liberty Global falling moderately on the news.
This deal of course still faces regulatory approval potential counter -- some questions about competition.
Liberty Global Mike -- spoke with me about the landmark deposition and why he feels it's so exciting.
Number one we are creating the largest cable company in the world the 25 million customers.
In our business thrives on scale it always has and always will more scale gives -- saw the upper -- we need to to drive efficiencies in margins and leverage programmers that are.
Secondly is very complementary to our own growth profile and third it enhances free cash flow.
For our business which gives us have -- continue buying back -- about that nine billion dollars with the shares.
Since we started and we just announce another three -- half billion dollar buyback over two years so.
It meets all the main -- year we have growth scale free cash flow and allows us to keep our capital structure levered.
And it's it's a perfect fit -- it's a natural fit.
On your side it is but I have to ask because we've seen this happen before do you anticipate any problems -- with regulatory approval and I asked not because.
Of US regulators per say but European regulators tend to be a -- bunch.
Now the EU we're very tight with with that regulators in the UN and they actually will be very supportive of this transaction we believe.
They're all about building you know Europe wide scale pan European scale they like that strategy.
And secondly we don't operate in the UK today so there's no overlap there's no reduction or diminishing of competition.
It's really just an extension of our business -- to a new market so it's my opinion it's our opinion that they would be very supportive this should be a quick review there should be any ready.
-- hurdles well it's getting a lot of attention but are you prepared for a counter bid from another company out there I'm not saying that that can even happen but are you ready I'm assuming you anticipate that all the time.
Sure we -- we never say never but we don't think there's a high likelihood of that in this instance it's a very fair price the structure is right.
The consideration of the components of the consideration are very attractive.
I'd be surprised if that happened but obviously yet you never know.
I just -- now is a better time than before for Liberty Global to make this -- from the Virgin Media was cheaper awhile back people -- question that all they want you got to do what's right for your company.
Looking to the reality of the deal now though where's specifically do you anticipate finding savings.
First of all with respect for the time being you know we don't get -- Did predict and all the time in our stock is up as well over that last two or three year period the financing markets are very very strong.
And I think the stars of the line to make this to happen in terms of synergies we've estimated a 110 million of annual synergies.
The operating expense line another seventy million synergies -- the capex I think those are conservative.
And they're gonna come from things like centralized functions around -- and procurement so traditional areas where.
Two cable -- come together they can obviously do things cheaper more efficiently and -- I think -- estimate of synergies is conservative.
-- what you talked about financing some analysts worry about the leverage the level of debt being taken on by Liberty Global I'm assuming you and your chairman doctor John Malone are not why not.
This is actually.
45 times leverage.
Virgin Media will be four times levered.
In a ring -- capital structure when the financing is completed on Friday.
With the ability to deal -- -- so we actually feel very comfortable with our leverage structure today we think will be -- -- very shortly here.
In our business is always been able to sustain.
The good leverage because we have strong predictable.
And you've got to be comfortable with Virgin Media -- mean it's actually on a really good role it's taken a few years but its customers seemed to absolutely love what it offers.
Including everything from high speed broadband to the digital service experience.
Will you Liberty Global continue to embrace how Virgin Media has been running its business.
I think the answer to that is yes the management -- there's -- a fantastic job as you point out.
In the broadband business in their new connected TV platforms in BD -- mole bile.
They have a strong competitive advantages in that market and we don't plan on disrupting that are changing the course materially.
How will add value where we can but more importantly we're just keep the engine -- it.
-- -- -- moving and does that include say for example the fact that Virgin Media broke out their numbers they credited Tivo with whom -- have a partnership for added subscribers.
Now -- I believe -- 35% of its entire customer base.
Do you continue to embrace that version of advanced television which which seems to be very popular.
We've rolled -- horizon in -- to markets Holland and Switzerland and Sunni -- -- horizon is our version.
Tivo but -- on steroids if you will so we told you believe in that experience for consumers giving him access to content on any device.
And giving them access to web content apps and personal content on the big screen and having a beautiful user interface so.
The horizon and Tivo are -- two variations of the very same theme which is giving customers a much better user experience we've learned something from Netflix.
And we're actually executing on an extremely well what about what seemed purchase superfast broadband base -- keep that as well.
Sure yeah the brand in the strategy remain the same in fact we are going to continue investing it.
The fact invest a bit more perhaps in the broadband network.
Speeds are going nowhere but up.
Consumption is going nowhere but up inversion is in a perfect position to take advantage of that with -- -- peer networks -- we're gonna keep that competitive advantage going for sure.
Speaking of competition the big Virgin Media competitor in the UK is B sky B which News Corp.
the parent of Fox Business has a stake in.
And as as you know much is made about the so called rivalry between John Malone and Rupert Murdoch the two chairman.
Will we see vicious competition or is there room in the world for both of these companies.
Well obviously -- -- -- in the world for both companies and I would describe it more as a friendship than a robbery.
This and it's a big dynamic media market and there's plenty of room for companies like ours and for -- to -- to succeed.
The relationship between sky and -- and last several years has been very very strong.
Not dramatic and we don't intend to change that we're not gonna pursue.
Content rights in competition with them it's a good strong partnership just like we have in Germany was Scott.
So I actually -- actually affect healthy relationship going for but those count those two companies.
And so what are we haven't got -- -- companies today moving slightly lower but what happens in the end the largest.
Pay TV company in the world in fourteen different countries.
It's a big deal here today closing.