Well I guess this solves one more piece of the puzzle. One of the big holdups in the Chello deal has been knowing who is going to own how much of who in Europe. Left in question was whether EU would let MSFT buy Liberty's stake in Telewest.
Interesting. It seems that T(Liberty) will have more power than originally thought. MSFT states:
John Frank, senior director law and corporate affairs for Microsoft Europe, said on Friday: "We have agreed to make certain modifications to the relationship between Microsoft and Liberty Media which had given us joint control. By unilaterally waiving these conditions the stake is no longer subject to a filing requirement [under EC law]."
Mr Frank said Microsoft had made three key changes, dropping the right to compel Liberty to coordinate its votes with Microsoft, to veto a change in chief executive, and to approve independent directors.
Man, I never realized what a stranglehold MSFT was going to have over the whole deal. I guess that's gone and I love the word unilaterally. It sounds like T has more leverage now. I wonder what, if anything, Liberty gave up for all this behind closed doors.
news.ft.com
Microsoft cuts Telewest stake
By Caroline Daniel in London and Neil Buckley in Brussels
Published: July 7 2000 17:14GMT | Last Updated: July 7 2000 19:33GMT
Microsoft, the US software giant, on Friday bowed to pressure from the European Commission and said it would give up joint control of Telewest, the UK cable operator.
The EU’s Brussels-based executive said Microsoft had agreed to limit its investment in Telewest to a minority stake, and would no longer seek to exert joint control with Liberty Media, the US media group. The company had withdrawn its notification of the deal to the European Commission, ending the in-depth, four-month, competition probe launched in March. Microsoft’s agreement to restructure the deal marks another success for the tough approach of Mario Monti, competition commissioner, who had circulated a draft decision to EU states blocking the deal as originally structured.
The case is the latest of several in which Mr Monti has acted to prevent one company becoming a "gatekeeper" in a new market, wielding so much power that it could prevent rivals from entering.
The Commission had made clear its concerns that the Telewest deal could allow Microsoft to develop a stranglehold on the software for digital set-top boxes in the UK.
The US software giant already had links with NTL, the cable operator which, together with Telewest, dominates the highly-concentrated UK cable industry.
Microsoft acquired a 23.7 per cent stake in Telewest last year as part of a side-deal to a bigger investment in AT&T, the US telecoms giant. It inherited an agreement giving it joint control of Telewest with Liberty Media, which has a 22 per cent stake.
John Frank, senior director law and corporate affairs for Microsoft Europe, said on Friday: "We have agreed to make certain modifications to the relationship between Microsoft and Liberty Media which had given us joint control. By unilaterally waiving these conditions the stake is no longer subject to a filing requirement [under EC law]."
Mr Frank said Microsoft had made three key changes, dropping the right to compel Liberty to coordinate its votes with Microsoft, to veto a change in chief executive, and to approve independent directors.
Microsoft had pursued a number of alternative remedies with the Commission in recent weeks, but Mr Frank said the decision to give up control rights was the "easiest and quickest way to finish off the regulatory approval process." The Commission on Friday vowed it would continue to ensure there was healthy competition in the market for set-top box software "by use of all its competition law instruments".
It believes digital TV is set to become the most widespread means for consumers to access entertainment, education, news and e-commerce.
"Since the final consumer cannot decide on the software and the digital services that are delivered to their homes via the set-top boxes, it is of the utmost importance that cable operators be able to make technology decisions on the basis of fair and equal competition," it said. |
