John Malone renews Murdoch rivalry as Liberty Global buys Virgin Media for $23.3bn

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John Malone's Liberty Global (NasdaqGS: LBTYA - news) has agreed to buy UK pay-TV company Virgin Media (NasdaqGS: VMED - news) for $23.3bn in a deal that sees the US billionaire lock horns with arch rival Rupert Murdoch in Britain for the first time.

Virgin Media's longstanding chief executive Neil Berkett will step down after the deal is closed, although Liberty said it has no plans to change the company's strategy of investing in its fibre network and content.

Shareholders in Virgin Media will recieve $47.87 a share, with $17.50 in cash and the rest in Liberty Global shares.

The acquisition cements Mr Malone's position as one of the biggest forces in the TV and broadband industry in Europe, where Liberty Global already owns businesses in Germany, Belgium and Switzerland.

"The deal dramatically increases the scale of our business and our business thrives on scale," said Michael Fries, the chief executive of Liberty Global.

Adrian Drury, an analyst at Ovum, said he expected a "slug-fest" between the two camps.

Virgin Media, with about 5m customers, still trails the market leader BSkyB (LSE: BSY.L - news) , which has 10.7m households signed up to its service.

Mr Fries said that Virgin Media and BSkyB are focused on different parts of "the food chain," but there is little doubt that Liberty Global will want to further sharpen Virgin Media's efforts to steal market share in Europe's largest pay-TV market.

Mr Malone's US company is making a multi-billion dollar bet on Britain even as the economy's recovery struggles to gain traction.

Liberty, which is based in Denver, was partly attracted by the success Virgin Media has had in persuading British customers to sign up for its package of pay-TV, internet and phone services. Mr Fries said he thought the company would continue to chart strong progress, despite the testing economic backdrop.

"If you look at our industry as a whole, it's not immune to economic difficulties, but it's resistant," said Mr Fries. Consumers will look around for the best deal but "their don't generally disconnect their TV and computer," he said.

Mr Malone and Mr Murdoch are longstanding rivals. They last did battle a decade ago when they wrestled for control of America's biggest satellite broadcaster DirecTV (NasdaqGS: DTV - news) . The stand off was only settled after News Corp (NasdaqGS: NWS - news) agreed to sell its one-thrid stake in the company to Liberty, and Liberty agreed to sell its its 16pc stake in News Corp, handing Mr Murdoch greater control of the media empire he founded.