Liberty Takeover of Virgin Media U.K. Again Pits Malone Against Murdoch

U.K. media expect a wave of marketing from Virgin to catch up to Sky

London ad sources expect a European marketing onslaught from a combined Liberty Global-Virgin Media company after Liberty founder John Malone announced the cable giant’s $16 billion agreed takeover of the U.K. telecom firm.

The Virgin Media brand will continue after Malone this morning vowed to retain it in the U.K. Sir Richard Branson, Virgin Media’s part owner, is expected to gain $316 million for his stake in the company.

The deal indirectly involves a third telecom tycoon, in that it is a cornerstone of Malone’s vision to create Europe’s largest broadband and pay TV provider to challenge longtime rival Rupert Murdoch and his Sky brand’s dominance of that market.

Branson’s shares in Virgin Media, comprising under 3 percent of the company, are a legacy of the 2006 U.K. merger of Virgin Mobile with cable company NTL Telewest to form Virgin Media.

In the U.K., Virgin Media competes vigorously with British Sky Broadcasting and BT in the so-called "triple play" market of entertainment, phone and broadband. Its brand positioning centers on delivery of high-speed broadband while BSkyB has emphasized its content offering.

A combined Liberty Global and Virgin Media will have 25 million customers in 14 countries. While Virgin Media has been gaining market share in the U.K., its 4.9 million customer base is half that of BSkyB’s.

Winning those customers cost Sky £145.1 million ($228.5 million) in marketing spend in 2011, according to Nielsen, compared with Virgin Media’s £30.3 million ($47.72 million).

London ad sources expect the combined company to “come out fighting” in marketing its services to challenge Sky. In Europe, Liberty Global trades as UPC, and it is expected that name will remain in place as Liberty plans both a U.K. and a European listing.

Liberty has been rolling out its Horizon hybrid Web/TV set top box across the Netherlands, Switzerland, Germany and Ireland in the past few months.

In the U.K., Virgin Media is best known for its advertising featuring Usain Bolt, the London 2012 Olympic gold-medal winning sprinter, who pulls his signature "Lightning Bolt" stance and markets the brand under the tagline “Keep Up.” Bolt was signed up pre-Olympics by the brand’s then agency, DDB London, and retained by its successor, Bartle Bogle Hegarty.

Last year Virgin Media’s broadband campaign was banned by the U.K.’s advertising watchdog, which ruled that the cable firm could not deliver on a promise relating to superfast download speeds.

There is speculation on whether Branson, whose Virgin Group describes the Liberty deal as a "merger," will continue his close association with the Virgin Media brand, which currently extends to personal appearances alongside Bolt in TV ads. Bolt, for his part, has committed to further activity with Virgin Media.

In one tongue-in-cheek DDB London ad, Bolt attempts to impersonate Branson by taking over his office and donning his trademark blonde goatee beard.