July 2013 was not a good month for Liberty Global.
In a bidding war for Kabel Deutschland, by far Germany’s largest cable operator, the U.S. company was outbid by Britain’s Vodafone. The British telecommunications company offered €87 per share, and the U.S. firm, which belongs to the empire of media mogul John Malone, only offered €85. The cable company went to Vodafone for €10.7 billion.
Now Liberty is planning a different deal in Germany, though a much, much smaller one. According to sources in the industry, the U.S. company is talking with Pro Sieben Sat.1 Media about jumping onboard its online video platform Maxdome. Mr. Malone’s envoys reportedly have in mind a stake of about 50 percent. Representatives of Pro Sieben Sat.1 did not want to comment on the issue. A request put to Liberty Global remained unanswered as of publication time.
The Americans have been on a buying tour for some time. In May, Liberty Global and its sister company Discovery Communications took over the British TV production company All3Media, which also had German subsidiaries with Berlin’s MME Moviement and Cologne’s Tower Productions. Then the U.S. company bought 6.4 percent of media entrepreneur Rupert Murdoch’s shares in the British commercial TV network ITV for €608.4 million. And most recently he acquired the Dutch cable operator Ziggo for €4.9 billion.
The buying spree makes sense. In a business where size counts, Mr. Malone has lost a bit of ground. His holding Liberty Media ranks as the world’s 11th largest media company, with sales of €10.8 billion. Mr. Murdoch, whose News Corp and 21st Century Fox combine revenues of €27.5 billion, comes in far ahead at fourth place, not to mention the industry leader Comcast, with sales of €48.7 billion.
Additional purchases in Germany have been difficult for Liberty. It has entered the market there with niche channels of its Discovery family (Discovery Channel, DMAX, TLC). But much more important is the cable operator Unitymedia, which is active in the states of North Rhine-Westphalia and Hesse.
Still not in the bag is the takeover of the cable operator in Baden-Württemberg, Kabel BW, which took place in 2011. In August 2013 the Higher Regional Court repealed the decision of the Federal Cartel Office, which had approved the sale of the company. Liberty has appealed this decision with the Federal Court of Justice in Germany.
It therefore makes sense that the U.S. company has now set its sights in Germany on a relatively smaller object with Maxdome. But that is also not entirely without risk. German media watchdogs do not like to see network operators like Liberty get involved with content providers.
A partnership with content provider Pro Sieben Sat.1 would be intriguing.
For Pro Sieben Sat.1 the offer from the Americans must have come at the right time. It is no secret that Maxdome, which has tough price competition, is in the red. Since Netflix and Amazon’s video platform Fire TV entered the market, the competition has gotten even stiffer. The French media company Vivendi has reportedly gotten into trouble with its German online platform Watchever, which has been for sale for some time.
The fact that the Americans would rather get involved with Maxdome than with Watchever is noteworthy. Is the video portal from Vivendi really so bad off? Or does Mr. Malone not see the sense in a stand-alone object in the German market? Is a possible continuing partnership with Pro Sieben Sat.1 and Liberty in the offing? It is still much too early to speculate about such a scenario. But such a partnership would be intriguing.
Kai-Hinrich Renner covers the media industry for Handelsblatt. To contact the author: [email protected]