Microsoft's Telewest purchase thrown into doubt

NEWS Microsoft has been forced to re-submit its proposals to the European Commission for the purchase of a 25.5 per cent share in UK cable company Telewest. The software giant's hopes of taking a controlling share of the company were in doubt earlier in the week following speculation that the European Commission planned to block the transaction. A spokesman confirmed the company had to change its proposals but declined to offer any details. Amelia Torres, spokeswoman for the European Commission refused to comment on reports that the deal had been rejected. She said a draft decision would be circulated to only the 15 member states for consultation and other interested parties would be notified on 4th August - the Commission's deadline to either approve or veto the deal. However, a source close to the transaction believed the Commission had barred the deal. The unnamed source said: "The Commission is indeed blocking the deal, otherwise why would Microsoft have to re-submit. There are now certain options open to Microsoft. It can refuse to make concessions and see what the Commission says, or it can say it will have a stake [in Telewest] but provide assurances there will be an open market for the provision of set top boxes. But, it's an open secret they offered this three months ago and the Commission said the concessions were not enough." A third option would be to remove joint control with Liberty Media who holds a 25.5 per cent stake in the cable company. "In removing the right to exercise control, the deal would not be categorised as a joint venture and if it is not a joint venture then it is not under the control of the European Commission. Alternatively Microsoft could just reduce its stake," said the source. Telewest remained unconcerned. A spokesman said the company had noted the issues but was not worried that the Commission would scupper the deal. He said: "This is a very important deal for Telewest and we are keen to have Microsoft as a shareholder and are reasonably positive that in some shape or form Microsoft will become a shareholder."