Elizabeth Judge, Telecoms Correspondent
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Sir Richard Branson, Virgin Media’s biggest shareholder, is open to a buyout of the cable group, paving the way for a potential deal at $10 billion (£4.9 billion) or more.
As The Times revealed on Saturday, Carlyle, the private equity group, is circling the television and telecoms group. The interest has kicked off an auction process in which Sir Richard, whose Virgin Group holds 10.5 per cent of the $8 billion Virgin Media, will play a critical role.
City sources said that Sir Richard was willing to weigh up any offer. It is believed that potentially he could seek to roll over some of his stake into a new entity. It is not clear at this stage what size of stake the billionaire entrepreneur would retain. Virgin Group declined to comment yesterday.
The latest negotiations for the communications group — whose turbulent history included a life-saving restructuring in 2002 — are believed to centre on a price above the $30 per share that was informally pitched to Virgin Media by a consortium of private equity players last year. A $30-a-share bid equates to an equity value of about $10 billion.
That previous approach, by players including Providence Equity Partners, Kohlberg Kravis Roberts and Cinven, failed to result in a deal because of opposition from key shareholders in Virgin Media, including Bill Huff, the influential New Jersey hedge fund owner. Today Mr Huff is far lower down the group’s share register, with only 4.9 per cent.
In addition, a key Huff ally, William Connors, who used to work with him in his hedge-fund business, recently stepped down from the cable group’s board after claims that Mr Huff had too much influence.
The latest takeover attempt comes after disappointment that the merger last year of NTL:Telewest and Virgin Mobile has failed to create the formidable force in home entertainment that had been hoped for. Since the deal the group has struggled to show the benefits and its Nasdaq-listed shares closed on Friday at $24.37.
Despite a £25 million branding campaign featuring the Hollywood actress Uma Thurman, the group lost nearly 47,000 customers in the first quarter of this year and became embroiled in a protracted legal dispute with BSkyB, in which News Corporation, the parent company of The Times, has a 39.1 per cent stake.
The continued failure to fulfil its perceived potential has put pressure on Stephen Burch, Virgin Media’s chief executive.
However, people familiar with Virgin Media are said to feel that having integrated its various parts, the group is now in a much stronger position.
In talks with potential buyers, Virgin Media is likely to emphasise that its advertising campaign has yet to feed into its results. In addition, it is likely to highlight recent figures from Ofcom, the regulator, showing that take-up of cable in Britain has hit its highest level for almost five years.
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When Virgin Media took over Telewest the service was supposed to get better. In my opinion it hasn't. Even the broadband seems to failing more frequently and as a matter of interest can anyone tell me where the Blueyonder Instant Suppor tool has gone. I have two ISP's one being Telewest and the other being BT. At this point in time the BT WiFi system is beating Virgin hands down. What on earth has gone wrong. The Telewest Blueyonder service used to be fantastic but not so anymore. We need a reliable email service that is not prone to problems. We also need self diagnostic tools to help fix connection problems. Any suggestions?
D Hough, Birmingham, UK
NTL/VIRGIN MEDIA TOOK from our bank account, OVER £500 in total, by Direct Debit over 27 months without our permission, or any contractual agreement. We have been phoning on a regular basis, and have been passed from Indian to English call centre, passed from Department to Department, and fobbed off with excuses as to why we have not had our money returned, since April 2007. To date, we are still waiting for that money. I would not recommend Virgin Media to any one. If some one takes money from some one else without their permission, that is theft.
Gill Blood, BOURNEMOUTH, UK
I recently lost all Virgin Media services without warning and tried through the various numbers (or call centres) to get some clarity. I was misled, misinformed and lied to over a 3 day period and I lost 3 days of work. The service with Virgin Media is abysmal, expensive, incompetent and yet a further example of generic responses being totally out of step with individual customer demands. My advice: GET OUT NOW! Oh, I hope Ms Thurman has banked that sizeable cheque from the ad campaign....you never know with Virgin Media; I bet she never uses it!!
Paul Moody, London,
I differ in my view to all of these coments. I am using NTL which is now Virgin media and I am happy with the service. This is a problem with us as customers. Every business man wants to make profit. so why do we think Mr Branson is a greedy person. If you know he has just 10% of Virgin media shares and a less control over the company. I believe that company has gone better under virgin name. Call centers are now open till midnight, new virgin central, TV box has improved. I am not sure what we complaining for as all the companies take DD changes. BT take a non direct debit charge. It do take time for a company to improve as I believe Mr Branson has no magic to turn the company around in few months. we have to wait and watch
Josh, Nottingham, Nottinghamshire
Virgin Media is a total washout. I used to be with NTL before take over from Richard Branson. Every time i ring to ask what is going on with my bill. or to query something, i get a non english speaking person (i do not wish to affend anyone at all).
I ask to speak to the manager or supervisor on duty, but to no avail.. What is going on ?????
Mr Branson is a greedy person. I work very hard to pay my bills. But each time i ring to ask why my bill is so high i cannot get any reply. Wow got through tonight at 7.22 pm. Spoke to an advisor about my bill, but when i questioned him about it , and i got annoyed, he was ranting and raving and so was i. But as soon as i mentioned about a takeover from another company he was having none of it. All out war, i asked to speak to supervisor once again but to no avail. I was cut off i have tried for the lat 30 mins to get through, but to no avail again. Why because i told them what i thought.
S Hudson, Leeds, England
I also think that Virgin Media is rubbish, I've been a Telewest customer for years but when Virgin took over the service went down the drain along with Telewest's reputation. I can't pay by direct debit because of my savings account so Virgin charge me £5 per month because of this. My advice is this, if your thinking of joining Virgin Media "Don't" as its a complete rip off now. Telewest never had the problems before but I think Virgin thinks more about profits than Customers
Tony Hall, Westbury, Wiltshire
Virgin Media have lost close to fifty thousand customers since re-branding took place. The service has generally deteriorated, they have introduced bandwidth throttling on all broadband packages, yet continue to advertise "unlimited broadband services". Customers must now pay for calls to Virgin support where previously this was free. Their "status pages" are full of unresolved tickets concerning loss of service, and many poular TV shows have been removed due to the issues with Sky. It's no wonder customers are deserting in droves
James Franks, Royston, Herts
VirginMedia is a company to avoid at all costs - i was very happy with Telewest, even ok after NTL took over, but VERY unhappy with VirginMedia's price rises, helpline charging, and £10 per month charges if the bill is paid late; as with their credit card (which is really MBNA, another bullying company) dealings and their phone company, VirginMedia have the reputation of take overs that offer LESS to the customer
peter ashworth, LONDON,
I'm also an ex-Blueyonder customer and agree the service was miles better then. It seems like they got rid of everything that was good about By and kept everything that was bad with NTL.
I have switched to a PVR Freeview box for TV and would switch my ISP as well, but by all accounts the ADSL suppliers are even worse than the cable monopoly.
Keith, Newcastle, England
"Virgin Media = a matter of style before content." Les Paine, London, England
Are you sure? I'm a Sky customer but I've got friends who have Virgin Media on their TV's and I must say I'm very impressed. Ok so they can't watch Lost or 24 (both past their sell-by date), but this 'TV on-demand' stuff is well ahead of anything Sky has got. Beauty is more than skin deep Les - perhaps you were pressing the wrong buttons?
Rod Munch, Northampton, UK
The whole virgin package isn't bad, but without the sky channels virgin's programmes are weak. Not much better than freeview really. That's why they lost so many customers and no amount of advertising will bring '24' back to the virgin screen.
Bob Reeve, Brighton,
I really do hope that a private equity firm doesn't take over Virgin. I'm no fan of Richard Branson at all, but it's better than the idea of an equity firm.
My parents have had cable for 12 years. The phone package that was already uncompetitive has become very unattractive due to greed by Branson. Broadband is still good but I expect Virgin to copy Sky and crank up prices every year on the tv packages. VOD is genuinely good but that was a telewest innovation from quite a while ago.
Paul, York, UK
Virgin Media full of promises and poor delivery if at all. Rather like the Labour Government. I've decide to leave - I cannot stand them any more and I'll be changing my mobile network from Virgin as well. Anything is better than this !
Dave, Newtown, Wales
I'm not too sure whether I should be that excited about a possible takeover. Virgin have sent me numerous letters about apparent "unpaid bills" and threatening to ruin my credit ratings. Funnily enough all this started after NTL got rebranded.
They said they'd upgrade us for free, but they never did.
Will Morgan, Kingston upon Thames, United Kingdom
If there is a Buyout of Virgin Media I hope the customer service improves.As customer of what was once Telewest I found the customer care excellent since Virgin took over any enquiries regarding problems to services are switched to India and you can imagine the problems that causes. Lets have our customer services dealt with in this country.
T,Mac, St.Helens, England
It has failed to become a "formidable force" because it failed to get its' basic pricing right.
Alan Chesterman, BOURNEMOUTH, UK
I always thought NTL were rubbish but would happily take them back. I did not want to cross to BSkyB as I felt we were being bullied to do so and I wanted to remain loyal. Unfortunately, Virgin Media do not feel the same. I sent them a letter of complaint on June 4th - still no response as they are busy dealing with lots of other complaints ! Great !
Adele, Guildford, Surrey
Virgin is a company that all should be following, both in company structure and forward thinking. The future is touchable, but only a few reach for it, Virgin is one of them!
Dave Bennett , Durban , South Africa
Well whatever happens, the support CANNOT be worse than it currently is. As an old Blueyonder customer, I was satisfied by the support before Branson moved in. Mind you, the onnly dealings I have had with any other Virgin company ended up with me getting a personal apology from Branson for the crap "service" I received (Virgin Cars, that was, now gone and - happily - forgotten).
Jeremy Poynton, Fromeville, 51st State
Virgin Media = a matter of style before content. It reminds me of those girls when I was a teenager, who said they would but never did. Frustrating interface. Gave up on them in the end. Both the girls and Virgin Media.
Les Paine, London, England