Emasculated Burch Was Shut Out of Virgin Media Sale Talks

27 August 2007

HOOK: UK: Documents filed last week with the US Securities & Exchange Commission cast a baleful light on the way in which former Virgin Media ceo Stephen Burch (pictured) was frozen out from all third party discussions concerning the sale of the ailing cable company.

US-controlled Virgin Media, formerly NTL:Telewest, operates solely within the UK and enjoys - if that is the right term - a total monopoly of cable operations. Despite which it has yet to emerge from the red and is saddled with massive debt.

Although predominantly US-held, its largest single shareholder is Sir Richard Branson's Virgin Group which holds some 10% of the company's stock - the result of the US giant's 2006 takeover of Branson's Virgin Mobile unit.

Burch, a former top Comcast executive, purportedly left Virgin for "family and personal reasons". However, the new SEC filing reveals that he is obliged to return stateside by the end of this year - a condition of his continuing to receive benefits.

It continues: "For the avoidance of doubt, following the separation date, Burch shall receive all the benefits available to Burch under the company's applicable expatriate policy as a former employee of the company, including, without limitation, tax equalization, relocation to the United States and continued medical benefits.

"Burch hereby acknowledges and agrees that he shall relocate to the United States on or before December 31, 2007.

"From and after the separation date, neither Burch nor the company shall make any statement that criticizes, ridicules, disparages or is otherwise derogatory of the other party.

"In addition, Burch shall not make any statement that criticizes, ridicules, disparages or is otherwise derogatory of any of the company's current or former subsidiaries, affiliates, employees, officers, directors or stockholders."

This lawyer's field-day appears to confirm earlier reports that private equity representatives negotiating a possible sale of the company were surprised at Burch's absence from presentations to potential buyers.

Word from within the Virgin Media bunker is that the former ceo's influence over the company was constrained by its US-based chairman James Mooney and major shareholder William R Huff.

The latter, a billionaire US financier, formerly the largest investor in both NTL and Telewest was the matchmaker of the marriage between the two companies.

The duo has long held the reins on the strategies and declining fortunes of the cable companies in their various cash-hemorrhaging incarnations.

While the part played by Branson in the Burch affair (if any) is unknown - although there have been persistent rumours of the former's unhappiness with the manner in which the company has been run.

Data sourced from MediaGuardian.co.uk; additional content by WARC staff