Cable Giants Tie Up To Tackle Sky
Cable giants Telewest and ntl have this morning announced their long-awaited merger, designed to present a more united threat to multi channel dominant Sky, and ease the companies’ individual financial woes.
The new business, which is valued at around $6 billion, will command a subscriber base of almost 5 million pay TV and broadband subscribers. This compares with Sky’s 7.8 million subscribers and Freeview’s 5.2 million households.
The consolidation of Telewest and ntl ends months of speculation over a possible merger, which was first rumoured in May (see Cable Giants Mull Merger To Tackle Sky). The move has yet to be given the green light by competition authorities, which could scupper plans for a smooth transition. Such intervention is believed to be unlikely, however, as both firms’ respective subscriber bases do not overlap or compete in any area of the country.
The merger will take the form of a takeover by ntl, with Telewest investors receiving $16.25 in cash and 0.115 shares of NTL stock for each share they own. Telewest shareholders will be left with 25% of the enlarged company, which values the smaller group at $23.93 per share, or around $6 billion.
Commenting on the deal, Simon Duffy, chief executive officer of ntl, explained: “This is a transforming transaction for the UK cable industry. It marks not just the culmination of a decade of consolidation but, more importantly, the creation of a new competitive force in the communications and entertainment sectors in the UK By sharing best practices across ntl and Telewest and by promoting innovation and leadership, the company will focus on enhancing dual and triple play penetration, improving sales and marketing effectiveness and driving customer centricity and service quality. This is a significant value creation opportunity for shareholders.”
Anthony Stenham, chairman of Telewest, added: “We are very pleased to recommend this value enhancing combination with ntl to our shareholders. The mix of stock and cash consideration will enable Telewest shareholders to realise immediate value for their shares and to participate in the upside of a combined company that is better positioned to compete in the UK marketplace.”
The consolidation will give the combined cable firm a footprint covering half of Britain’s households, enabling more effective competition with both existing broadcasters such as Sky and Freeview, and emerging players in the industry such as BT (see BT Plans To Revolutionise TV With Personal Channels).
NTL: 01256 752000 www.ntl.com Telewest: 0845 142 0000 www.telewest.co.uk