Friday, November 12, 1999 Published at 20:12 GMT
Business: The Company File
C&W shares fall on NTL deal referral
Trade Secretary Stephen Byers is worried about the effect on pay-TV
Shares in Cable & Wireless Communications have fallen sharply on news that the UK Government has referred NTL's planned purchase of CWC's cable business to the Competition Commission.
C&W Communications shares closed 65.5p or 9% lower at 670p after hitting a low of 650p shortly after the announcement.
Trade Secretary Stephen Byers said that although Fair Trading officials had advised against the referral, he believed the acquisition raised sufficient concerns over the market in the delivery of pay-TV services to warrant the move.
"Effective competition in these growing markets is of central importance to the consumer," Mr Byers said.
"I...am concerned about the possible effects on this developing market of the reduction in the number of cable operators from three to two."
NTL and CWC said they were disappointed, but they still hope the deal could be concluded on time in the spring of next year.
"We will comply forthwith to reach a rapid conclusion. We continue to believe the combination of the companies involved is in the public interest," NTL Chairman Barclay Knapp said.
Decision 'a surprise'
Analysts said the referral was a surprise and, although they did not expect the Commission to block the deal, it would probably take longer to complete than had been hoped.
"I think the deal will go through in the end but obviously now it will drag on,'' said one analyst.
Nasdaq-listed NTL announced in July it was buying the cable TV arm of market leader C&W Communications for £8.2bn, leaving Telewest Communications as its only rival.
At the time, NTL said it expected the deal to be completed within six to nine months.
Vivendi deal referred too
Rupert Murdoch's satellite TV giant BSkyB also fell after Mr Byers said he was asking the Commission to look into French conglomerate Vivendi's acquisition of a "material interest" in it.
He said the deal "raised concerns over the market for film and sports rights and for conditional access technology in the UK".
The shares were 3% lower at 635.5p.
The Commission is due to report by 25 February on both cases.
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