Dutch cable TV unification comes closer

The prospect of the two major Netherlands cable TV operators merging has come closer after cable giant Liberty Global raised its stake in Ziggo from 12.65 percent to 15 percent.

Between them, Ziggo and Liberty Global’s UPC Netherlands account for nearly all of the Dutch cable TV market. Liberty Global has made no secret of its desire to take control of all cable TV in the country, figuring that as the two operators have little overlap in coverage area, any merger would clear regulatory hurdles, given also that there are strong alternative pay-TV suppliers such as Telco KPN with IPTV.

Nevertheless, with 90 percent of Dutch households receiving their TV signal over cable, given the country’s dense population, having control of the lot would be a big prize. Yet, the door opened for Liberty Global almost by accident when UK-based Barclays Capital Securities found itself with a 20-percent stake in Ziggo that it did not want and then failed to attract sufficient interest from buyers. This led to Liberty Global stepping in to acquire its initial stake for €632.5 million from Barclays Capital and then coming back for more, fueling rumors of a takeover.

While Liberty Global is U.S.-owned and based in Englewood, CO, and built up by entrepreneur John Malone, it focuses on markets outside the U.S., primarily in Europe where it has broadband and pay-TV operations in 11 countries. It has recently been expanding its European empire substantially, first focusing on Germany, where it bought cable operator Kabel Baden-Wuerttemberg for about $4.5 billion in 2011 after earlier acquiring KBW's larger rival Unitymedia.

Then, in January 2013, it raised its stake in Belgian cable operator Telenet to around 58 percent after a tender offer to take full control failed. Then, it netted its biggest fish yet by agreeing in February 2013 to acquire the UK’s dominant cable provider Virgin Media for $16 billion.

Even if Ziggo is not acquired, it looks like it will cooperate increasingly with UPC Netherlands, particularly over deployment of Wi-Fi hotspots across the country. Cable operators around the world are now looking at Wi-Fi as a way of deploying multiscreen services through hotspots in customer homes, public places and also around their own street cabinets in some cases. According to UK media technology analysis group Rethink Research, Ziggo is planning to deploy an additional 1 million home-based hot spots by August 2013 for shared use by subscribers and to work with Liberty Global in the Netherlands effectively to become Europe’s leading experiment in cellular Wi-Fi offload.

So, whether or not Liberty Global takes full control of Ziggo, it looks like the two will present an increasingly united front against rivals KPN and satellite operator CanalDigitaal.