Liberty Global will acquire Virgin Media, the main cable television company in the United Kingdom, in a stock and cash merger valued at approximately $23 billion. With 25 million customers and 35,000 employees, the combined operation will become the largest cable television company in the world, slightly bigger than Comcast and almost twice the size of Time Warner Cable. Given that Liberty has invested in its own Horizon platform, working with NDS, now part of Cisco, what does that mean for the relationship between Virgin Media and TiVo?

As far as Liberty Global is concerned, the deal is all about scale and increasing efficiency. Scale provides greater leverage with technology suppliers and enables product development costs to be spread over a broader base.

Liberty Global is rolling out its Horizon platform in Holland and Switzerland, with Germany and Ireland following. It would seem likely that Liberty Global would want to establish Horizon as the common platform.

Virgin Media entered into a multi-year mutually exclusive agreement with TiVo in November 2009, under which the pioneer of the personal video recorder became the exclusive provider of middleware and user interface software for its set-top boxes. The contract could have several years left to run.

TiVo has been dependent on patent litigation awards for profitability and was counting on royalties from deals like the one with Virgin Media to drive real revenues.

So far the indications are that Liberty will not be making any immediate changes at Virgin Media, which has 1.33 million TiVo subscribers, around 35% of its nearly 3.8 million television customers, after one and a half years of marketing the platform.

Although Virgin Media likes to talk up its TiVo offering, most of its cable television customers are still using an interface based on technology that dates back over a decade.

Liberty originally looked at TiVo but opted instead to develop its own Horizon platform, in collaboration with NDS, now part of Cisco. Samsung provides the hardware and also supplies boxes to Virgin Media.

The Horizon service has been well received by customers and industry commentators. It is based on a home gateway set-top box that also supports viewing on personal computers, tablets and smart phones within the home.

In an interview with Bloomberg in January before the acquisition was announced, Mike Fries the chief executive of Liberty Global appeared dismissive of TiVo. “Nobody gets their DVR from TiVo any more,” he said.

In a conference call with analysts on 6 February, he was more diplomatic: “We’ve rolled out Horizon, of course, which integrates web and personal content on the TV, allows you to consume and manage content on multiple devices in the homes, and provide a beautiful and elegant user interface. Virgin leads the connected TV market in the UK with TiVo.”

Responding to questions he said: “The connected TV market in the UK is very advanced, and the TiVo product has proven to be a market leader in that respect.” However, he did not elaborate on the prospects for TiVo.

Neil Berkett, the chief executive of Virgin Media, described TiVo as “the best connected TV product in the country”. He will be stepping down on completion of the acquisition and will no doubt be handsomely rewarded for his work in turning around the company.

It is anticipated that the merger will create annual cost savings of $110 million in operational expenditure and $70 million in capital expenditure. The Virgin Media name will remain, for the immediate future at least.

Whether Liberty Global will want to remain dependent upon TiVo for product development in the United Kingdom, while rolling out its own platform elsewhere appears open to question.

In an interview with Fox Business Network, the chief executive of Liberty Global described Horizon as “our version of TiVo, but a bit on steroids”. He said: “Horizon and TiVo are two variations of the very same theme, which is giving customers a much better user experience.”

Some would say Horizon offers a better experience than currently available through TiVo with Virgin Media. There are many similarities, but Horizon has the edge in many respects. The Horizon box has six cable television tuners, while TiVo has three. Horizon supports DLNA and WiFi whereas the TiVo box does not. The Horizon user interface has slick transparent menus, while TiVo now looks rather dated.

While it seems unlikely that there will be any rush to replace the 1.3 million TiVo boxes that Virgin Media has only recently provided to customers, it may make more sense to migrate to a common platform in the longer term.