| Cable Wars Unleashed, NTL Agrees to Buy Telewest |
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Chetan Anand, 24x7 Updates
Giving an onus to ever burgeoning cable wars and ending longtime speulations NTL Inc., Britain’s biggest cable operator, agreed to buy Telewest Global Inc. for about $6 billion, creating a larger rival for U.K. pay-television leader British Sky Broadcasting Group Plc.
NTL will pay $16.25 in cash and 0.115 of its own shares for each share in Britain’s No. 2 cable provider, Hook, south England-based NTL said today in a Business Wire statement. The deal values Telewest at $23.93 a share. The stock closed at $22.95 on Sept. 30.
The deal ends more than three years of speculation about a linkup of the two companies, which defaulted on $26 billion of debt in 2002. NTL is hoping a reorganized combination will be better equipped to fight Rupert Murdoch’s BSkyB, which has more television customers in the U.K. than the two cable providers put together.
``While the combined entity could potentially pose a longer-term competitive threat to BSkyB, the merger of the two companies could give BSkyB a short-term competitive boost in that it may distract the cable companies from external growth as they merge their networks,’’ Aryeh Bourkoff, an analyst at UBS AG, said in a note to investors today before the transaction was announced.
Simon Duffy, NTL’s chief executive, will lead the combined company, NTL said in the statement.
NTL may eliminate more than one in four jobs from the combined workforce of 19,000, helping reap savings of 200 million pounds ($352 million) across the group in 2006, UBS has said.
Goldman Sachs Group Inc. is NTL’s adviser. Deutsche Bank AG and N.M. Rothschild & Sons are advising Telewest.
Same Shareholders
A merger of the two cable operators had seemed likely to many analysts and industry executives, including former Telewest Managing Director Charles Burdick, because the two companies’ networks don’t overlap and they share the same largest shareholders.
Bill Huff, who runs W.R. Huff Asset Management Co., is the biggest investor in Telewest with a 16 percent stake. He also holds about 12 percent of NTL. Other common stakeholders are FMR Corp., Franklin Mutual Advisors and Oaktree Capital Management. The money mangers amassed their stakes after the cable companies swapped their bonds for new shares.
Shares in NTL have fallen 8.4 percent this year, compared with a 31 percent gain in the same period by Telewest stock.
Crippling Debt
NTL and London-based Telewest crippled themselves under debt as they rolled out fiber-optic networks and bought rivals when valuations were at their peak. NTL’s bond default was Europe’s biggest ever.
The two companies handed control to creditors -- NTL in 2003 and Telewest a year later -- after failing to attract enough customers for their television, phone and Internet services to repay the interest on their borrowings.
In similar reorganizations, both operators incorporated themselves in Delaware and listed their shares in New York. The processes claimed the jobs of two Telewest chiefs, Adam Singer and Charles Burdick, and led to the departure of NTL Chief Executive Barclay Knapp.
Today’s agreement ends months of talks that had stalled as the companies debated what to do with Telewest’s program-making division, Flextech, according to newspapers including the Times.
Flextech runs television channels including Bravo and LivingTV. Telewest also owns 50 percent of UKTV, a joint venture with the British Broadcasting Corporation and the largest supplier of channels to the British pay-TV market. Telewest controls Sit-up Ltd., a U.K. home-shopping channel company.
NTL Chief Executive Simon Duffy had said owning a programming business might not suit a cable operator and Telewest has sought separate bids for Flextech. Analysts at UBS valued Flextech and the other two assets at between 800 million pounds and 1.1 billion pounds.
Freeview Battle
In August, NTL posted a second-quarter profit of 73.5 million pounds. Sales fell 2.3 percent. Over the same period, Telewest reported profit of 19 million pounds as sales rose 17 percent.
NTL has already stripped itself of assets ahead of the takeover of Telewest. Last year NTL sold its broadcast unit for 1.27 billion pounds to Sydney-based Macquarie Communications
Infrastructure Group. In May this year, NTL sold its Irish division for 325 million euros ($389 million).
Still, a merged company would still have fewer viewers than London-based BSkyB. At the end of March this year, BSkyB had 7.70 million television subscribers. NTL had 3.19 million, while Telewest had 1.82 million.
The combined group would also have to battle Freeview, which offers digital television for nothing other than the cost of a set-top box.
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State-run carriers Air India and Indian Airlines will tap the market with initial public offerings early next year to finance expansion plans, Civil Aviation Minister Praful Patel said on Saturday. The government has been considering allowing the state-run carriers to go to the market for a while to fund their rising investment needs but had not indicated when it might do so.
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Asian stocks rose for a fifth week, led by energy stocks such as Woodside Petroleum Ltd. and Inpex Corp., as Hurricane Rita caused crude oil prices to surge. The Morgan Stanley Capital International Asia-Pacific Index, which tracks more than 1,000 stocks in the region, gained 0.7 percent to 109.96, reaching a five-year high this week. Indexes in Japan rose to four-year highs and touched records in South Korea, India and Australia.
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Snapping companies to streamlines its business,today reported a slim rise of 2% percent in its profit for this quarter as the company struggled with sluggish sales of its flagship database software. Larry Ellison’s baby ORACLE reported a profit of $519 million, or 10 cents a share, in its fiscal first quarter ended Aug. 31, compared with $509 million, or 10 cents a share, a year earlier. Sales grew 25 percent to $2.77 billion compared with the year-earlier period, reflecting its recent large acquisitions, including PeopleSoft and Retek.
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Crude oil prices neared $68 per barrel Thursday as Hurricane Rita closed in on Texas, raising fears it could cripple major production facilities largely untouched by Hurricane Katrina three weeks ago and drive up at-home energy costs this winter. According to Met’s category 5 hurricane Rita weakened slightly early Thursday but that gives no cause for cheers as even with lesser winds Rita which is headed for the heart of U.S oil production poses a serious threat to capacity.
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| Delta’s U Turn - A Swift Turnaround - Sep 23, 2005 5:28 IST |
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A mere eight days after filing for bankruptcy protection, Delta Air Lines Inc. signaled Thursday it wants to move quickly to reduce costs as it announced it will eliminate up to 9,000 more jobs, slash pay for executives and other employees and cut domestic capacity while adding more international flying. The changes are part of Delta’s effort to save an additional $3 billion annually by the end of 2007. That’s on top of $5 billion Delta had previously said it wanted to save by the end of 2006.
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Oracle will certify that its iFlex and Retek applications will run on IBM’s DB2 database as well as Oracle’s database, and it is actively considering whether its future Fusion applications will be engineered to work with DB2 as well. But CEO Larry Ellison said Wednesday that any competing databases Oracle supports must be able to run the thousands of tests that certify that Oracle’s applications will work with that database. Ellison says IBM is capable of that and so is Microsoft, should Oracle decide to support its SQL Server database.
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Hurricane Katrina seems out of rate rise path, showing shear confidence of Federal Reserves in economy’s strength to endure the long term affects and high energy cost caused by hurricane Katrina.
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Microsoft on Tuesday announced the new structure of the organization, in a bid to address it’s midlife crisis which its investors say has lead to a big, less profitable company not able to respond swiftly to the changing market. The plan calls for a reorganization of Microsoft into three large divisions led by individual presidents, each reporting to Steve Ballmer, Microsoft’s chief executive.
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| Oil Prices Spike Amidst Storm Threats - Sep 20, 2005 20:12 IST |
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After hurricane Katrina spelling doom for oil consumers all over the globe Crude-oil futures yesterday surged more than $4 -- the biggest one-day price jump ever -- amid worries that Tropical Storm Rita strengthening off the Bahamas could hit US oil facilities in the Gulf of Mexico this week.
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New York -- Microsoft Corp. is considering acquiring a stake in Time Warner Inc.’s America Online Inc. unit, one of a number of possible Internet joint ventures the two companies are discussing, people familiar with the talks said.
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Ebay Inc. is in the final stages of sealing an agreement to buy Skype, the free & low cost provider of voice calls over the internet for an amount close to $4.1Bn.
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Riyadh(24x7updates) -- Saudi Arabia is all set to join the World Trade Organisation by end of this year. This follows the signing of key trade agreement with US on Friday, which says Saudi Arabia will not enforce a boycott against American firms that have trade relations with Israel.
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| Total Recall - Ford, Toyota Recall SUVs, Pickups - Sep 8, 2005 17:15 IST |
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In what could be called one of the major recalls in automotive industry, Ford Motor Co. said it would call back 3.8 million pickup trucks and sports utility vehicles to repair a cruise control switch that could overheat and cause engine fires. Toyota Motor Corp. has also announced a recall of 978,000 compact pickups and sports utility vehicles to have the vehicles checked for a fracture in steering system control rod that can cause drivers to lose control of their vehicles.
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Microsoft & Google are in courts again over whether Kai-Fu Lee, an executive familiar with Software Giant’s plans in China should be allowed to start his work with Google.
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| Chiron Rejects Novartis’ Proposed Takeover - Sep 6, 2005 21:0 IST |
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US Biotechnology company Chiron has rejected a takeover bid by Swiss drugmaker Novartis, citing $40 a share as inadequate.
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