Liberty Global gets green light for German cable deal
Jörn Krieger ©RapidTVNews | 16-12-2011 US media company Liberty Global will at last be able to take over Kabel BW after German cartel office the Bundeskartellamt approved the sale of Germany's third-largest cable operator.
Liberty Global announced in March 2011 that it would take over Kabel BW from Swedish private equity company EQT for around €3.16 billion. The cartel office initially voiced strong concerns for competition which the US company countered by offering far-reaching concessions.
By combining Kabel BW with Germany's second-largest player Unitymedia, which it acquired in November 2009, Liberty Global can create a powerful counterweight to market leader Kabel Deutschland.
To obtain the approval by the anti-trust authority, Liberty Global committed itself to far-reaching conditions and obligations which are meant to improve the competition conditions in the cable market. Housing associations will get the right to prematurely cancel the long-term wholesale contracts for cable services to enable them to look for more favourable alternatives for their tenants. For example, Deutsche Telekom has been offering the deployment of apartment blocks with cable TV, internet and telephony since the beginning of 2011.
Liberty Global also obliged to lift the encryption of digital free-to-air channels on Unitymedia's cable network. The measure, which is already practised by Kabel BW, facilitates customers' access to digital television as they can use any reception device of their choice - without a smartcard, activation process, subscription contract or additional fees. At the same time, it opens the possibility for competitors to combine the digital free-TV offering on cable with their own products, for example internet or telephony.
Furthermore, Liberty Global will remove exclusivity clauses from its contracts with housing associations. This will enable competitors like Deutsche Telekom to roll out their own fibre-optic lines to apartment blocks which are already served by a cable operator.
"This merger could only be cleared with far-reaching commitments by the companies involved," Bundeskartellamt's president Andreas Mundt said in Bonn. "We now see the chance of more competition in the cable markets. With the obligation to open up large long-term contracts with the housing industry and to give up further contractual rights as well as the basic encryption of digital free-TV channels, the negative effects of the merger are compensated."
With Unitymedia and Kabel BW which serve a total of 7 million customers, Liberty Global will become the second largest force in the German cable market. Kabel Deutschland currently has 8.8 million customers.
Liberty Global thereby succeeds in its second attempt to gain a strong foothold in Germany's cable market. In 2002, the US company tried to take over the country's whole cable network which used to be in the hands of Deutsche Telekom back then, but was blocked by the cartel office.
The green light to the large-scale merger could open the door for a further consolidation of Germany's cable market. Kabel Deutschland, for example, made no secret of its interest in taking over smaller competitors in its coverage area in the past