Liberty Global has posted a far better set of figures for the first quarter of 2014 than for the last quarter of 2013, with revenues up 2% year-on-year at $4.5bn and operating income up 10% at $582m, starting to justify its intense focus on the quad play.
Liberty’s overall strategy has crystallized. It has finally moved out of original content with completion of the sale of most of its Chellomedia division to AMC Networks in January. This mirrored Virgin Media’s earlier exit from the content business when it sold its wholly owned TV channels to arch-rival Sky early in 2010.
Liberty is now operating more evenly across the whole spectrum of quad play, building up its mobile strategy around both Wi-Fi and LTE to become a fully-fledged MVNO while also achieving universal fixed line coverage where possible in those countries where it does not have that already.
Its other prong relies on multiscreen and hybrid TV within the home, based on the Tivo and Horizon platforms, combined with expansion into over-the-top, where Virgin Media has led the way, firstly by launching a version of the BBC iPlayer catch-up service through its HFC broadcast platform in the UK in May 2009, and then providing access to Netflix from November 2013, having also incorporated YouTube.
Liberty Global CEO Mike Fries hinted recently that the operator was considering making Netflix available similarly within its broadcast environment in other countries. But then he added that in the longer term the firm would be looking to launch its own OTT service, having consistently argued that cable operators are well placed to offer everything an online provider such as Netflix can, with additional benefits in quality of service and connectivity around the home.
In mobile, Liberty is progressing on several fronts, having recently launched cellular services in Switzerland, and revamped its quad play offers in the UK around the Virgin Mobile brand. It has also expanded its WiFi-Spots in Belgium and the Netherlands to over 1.5m locations. Fries indicated that Liberty Global would be looking to provide HetNet services combining Wi-Fi and cellular in those markets where it does have hot spot capacity. The plan is to expand its Wi-Fi coverage with homespots, achieved through a combination of home router partitioning and switching on additional public SSIDs in residential gateways to provide external coverage.
On the fixed line front, Liberty Global’s main focus has been on securing its acquisition of Ziggo, the Dutch rival to its own UPC Netherlands, which would achieve almost total broadband coverage in the country, given that nearly every home is passed by cable. The deal had been agreed between the companies for $9.3bn, but the European Union’s antitrust authority decided in March 2014 to conduct a review, since with the combined operator having access to over 90% of the country’s households, it exceeded a threshold for such action. The EU has now decided to move the deal to a phase two investigation to give a further working 105 days to scrutinize it. Liberty Global insists that the deal is therefore on course for completion during the second half of 2014, although we expect either further delaying tactics then or an outright refusal to allow the deal to go ahead.
The issue here is that the deal can only be regarded as anti-competitive within the province of the Netherlands, rather than across Europe as whole as is within the EU’s remit. It is only within the Netherlands where the deal would give the combined company a dominant position in both TV and especially broadband, with KPN the primary competitor. The takeover should therefore fall within the province of the Netherlands Authority for Consumers and Markets, but this is a new body that has only just been formed through a merger between other regulators. It has requested that the European Commission let it handle the case, but Liberty Global has openly stated it wants to work with the European Commission only.