US cable giant Liberty Media, controlled by ubiquitous and ambitious tycoon John Malone, is mulling a deal to acquire and merge NTL and Telewest, the heavily indebted US-owned duopoly that dominate Britain's cable industry.

This is thought to be Malone’s ‘Plan B’ in the near-certain eventuality that German competition authorities will block his €5.5 billion bid to acquire 60% of Deutsche Telekom's cable TV network [WAMN: 29-Jan-02]. Says an industry insider: “John is looking at where he can move his pot of money if the German deal goes down and the UK is the obvious place.”

Malone has already met with fellow American Barclay Knapp, chairman of NTL. They are believed to have discussed the first step in plan B – the financial restructuring of NTL prior to a merger with sole UK rival Telewest. Liberty already holds a 25.2% stake in Telewest and votes in concert with its other principal investor, Microsoft – together comprising a voting majority.

According to a source close to the discussions: “It makes sense to put both the UK assets together. There are plenty of obstacles and before you get down to that conversation, you have to clear up the NTL balance sheet.”

Meantime, market concerns over Telewest’s £4.9bn ($7bn; €8.04bn) debt caused shares to fall sharply Wednesday. Following a downgrade by the company’s joint broker Merrill Lynch, stock plunged 23% to a record low of £0.20..

Data sourced from: Financial Times; additional content by WARC staff