Liberty Global Beats Estimates on Subscriber Gains

John Malone’s Liberty Global Plc reported quarterly revenue that beat estimates while saying the European Union will probably extend a probe into its agreement to buy Dutch cable operator Ziggo NV.

Sales rose 70 percent to $4.53 billion in the first quarter, helped by a gain in subscriptions, the London-based company said in a statement yesterday. Analysts had on average projected $4.52 billion, according to data compiled by Bloomberg.

Liberty Global, which owns cable companies from Hungary and Poland to Germany and the U.K., said EU merger watchdogs will probably extend their examination of its planned purchase of Ziggo for 4.9 billion euros ($6.8 billion). Liberty, which has spent almost $50 billion to consolidate Europe’s cable industry in recent years, has been awaiting clearance for the deal by regulators.

“We expect to hear shortly on the next phase and I’m confident we can address any competition issues being raised,” Chief Executive Officer Mike Fries said on a conference call today, adding that the company expects the transaction to close in the second half of this year.

Liberty Global shares rose 2 percent to $43.55 at 10:18 a.m. in New York, giving the company a market value of $33.1 billion.

The company plans to start a tender offer in about a month’s time, and looks forward “to demonstrating the benefits that this strategic combination will bring to Dutch consumers and businesses,” Fries said.

Content Suppliers

EU regulators have been questioning TV content suppliers to check whether the tie-up would have effects beyond the Netherlands. The Dutch competition authority has asked the EU to hand over the deal, saying it knows the country’s market best and all the cable customers are in the Netherlands.

The EU had until early May to decide on the Dutch request and a deadline of May 8 to approve the deal or open a longer probe into antitrust issues. Malone wants to add Ziggo’s 2.7 million cable customers in a combination with its UPC cable unit to take on Dutch carrier Royal KPN NV.

The company provided 49 million subscription services at the end of the quarter in March, up by 370,000 from Dec. 31.

“Based on this strong start to 2014, we remain confident in our ability to achieve our public guidance targets,” Fries said.

Succession Plans

Liberty Global said it bought back almost $400 million of its stock in the first quarter and is committed to buying back a further $3.1 billion in the period from April 1 through December 2015.

The net loss widened to $79 million in the quarter from $1 million a year earlier, driven by losses on derivative instruments, the company said.

In February, Malone set succession plans in motion by giving Fries and the CEO of Discovery Communications Inc., David Zaslav, the right to buy his stakes should he decide to sell. Malone, 73, said at the time he would stay active with both companies and had no plans to transfer any voting shares.

Liberty Global said in March it was planning to offer mobile-phone services to customers throughout Europe with a mobile virtual network operator system, or MVNO, the name given to companies that use other carriers’ wireless infrastructure for their own mobile services.

Fries said today the company recently set up its first MVNO in Switzerland, will start one soon in Holland and is targeting a pan-European WiFi network, aiming for 4 million WiFi hotspots by year’s end, from about 1.5 million today.

The company will also get more involved in the production of content should it find a partner and be convinced of the financial return, Fries said. Any such move would be “in incremental steps to build a content portfolio” and not a large transaction such as the purchase of a studio, he said.