Liberty Global buys a chunk of ITV ; next step a full takeover?

Cable billionaire John Malone has bought a 6.4 per cent stake in London-based ITV, the UK’s biggest commercial broadcaster with top-rated shows such as “Downton Abbey.” with speculation mounting that the next step is a full takeover

ITV"s jewel: Downton Abbey

Malone’s Liberty Global made the buy from from Rupert Murdoch’s British Sky Broadcasting Group for £481m.

ITV shares jumped as much as 10 percent in London. Liberty Global said it doesn’t plan to make a full takeover bid for now.

The purchase gives Liberty Global, owner of UK cable provider Virgin Media, a stake in channels including ITV, ITV1 and ITV Family, and indicates a strategy shift to focus more on owning content.

Bloomberg commented, “It’s also reminiscent of earlier Malone deals to build stakes in cable companies before seeking takeovers.”

“It is hard to see how this will not be looked at as anything other than Liberty planting a flag in the ground for a potential acquisition at some point” of ITV, Liberum Capital analyst Ian Whittaker said in a note.

Liberty Global paid 185 pence a share for the ITV stake. The stock climbed 8.1 percent to 198.70 pence at 12:10 p.m. in London trading.

In May, Liberty Global bought TV producer All3Media in a partnership with Discovery Communications (DISCA) for almost $1bn. Malone owns 29 per cent of voting rights in Discovery.

Internet TV and film-streaming services such as Netflix have reshaped the industry for Liberty Global and other cable companies, because owning the rights to content has become more valuable as programmess are accessed in more ways .

An ITV spokesman said in a statement, “We note Liberty Global’s announcement and we will work with them as with any other shareholder as we continue our strategy of growing ITV.”

In January, Liberty Global agreed to buy Dutch cable provider Ziggo NV for 4.9bn euros ($6.6bn) after gradually boosting its holding.

Today’s deal will give BSkyB cash to help finance its planned acquisition of pay-TV assets, said Bloomberg,

The company, which is 39 per cent owned by Fox is in talks to buy Fox’s Italian and German units. A transaction could be valued at about 10 billion euros, people familiar with the matter said in May.

Liberty Global said ITV investment doesn’t require regulatory approvals.

Under UK takeover rules, Liberty Global must now wait six months if it intends to make a full bid for ITV. Those rules can be waived if there’s a major change in ITV’s business or if the board consents to merger talks.

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