Virgin Media inserts clause to prevent sale of TV arm to NewsCorp, sources say

This article is provided to FT.com readers by mergermarket—a news service focused on providing actionable, origination intelligence to M&A professionals. www.mergermarket.com
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Virgin Media has inserted a clause into the sale of UKTV preventing the eventual auction winner selling it on to rival bidder BSkyB, 39.1% owned by NewsCorp, sources close to the situation told dealReporter.

A source close to US-listed Virgin Media which is running a process to sell television company UKTV, a 50:50 joint venture with the BBC, and the smaller international part VMtv, said: “That clause is fairly typical when you have a tight competitive situation.” Virgin Media declined to comment.

A source close to Sky which in May was reported to have lodged a GBP 160m bid for seven Virgin Media channels said: “They [Virgin Media] don’t want someone else to sell it on in a quick flip.”

A source at a company seeking to acquire VMtv said: “We were told we couldn’t sell to a company controlled or owned by News Corporation. If it ends up with Sky, it’ll have to be in their own terms and for a high valuation.” A third sector banker said he was aware of the clause.

Media companies recently reported to be interested in the TV channels include Sky, Time Warner, NBC Universal and RTL. BBC Worldwide has been reported to be a likely buyer for UKTV with Channel 4, if the broadcasters agree on a partnership.

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