John Malone, chairman of Liberty Media. (Bloomberg News)

John Malone's Liberty Global Inc. is in talks for a deal with U.K.'s Virgin Media Inc., targeting a cable-television provider worth more than $10 billion to challenge Rupert Murdoch in Europe's biggest pay-TV market.

The companies are in discussions "concerning a possible transaction," Virgin Media said Tuesday, without providing details. The Hook, England-based company's shares jumped as much as 20 percent in London and 18 percent in New York.

An acquisition would let Liberty Global add Virgin Media's almost 5 million cable customers and open a new battle ground with fellow billionaire Murdoch, whose News Corp. controls the largest U.K. pay-TV provider, British Sky Broadcasting Group Plc. Malone is using Liberty Global to grow in markets outside the U.S. and already runs pay-TV providers in European countries including Germany, Belgium and Switzerland.

"This gives Liberty Global great European scale," said Andrew Hogley, an analyst at Espirito Santo Investment Bank in London, who recommends buying Virgin Media shares. Being owned by Liberty Global would give Virgin Media the chance to "push more aggressively for market-share gain."

Virgin Media, whose shareholders include Richard Branson's Virgin Group, rose as high as 2,967 pence and gained to 2,864 pence at 2:55 p.m. in London. It had added 62 percent in the 12 months through yesterday. The U.S. shares jumped to $45.14 in New York.

BSkyB lost 1 percent to 808 pence. Liberty Global, up 47 percent in the past 12 months, fell 4.1 percent to $66.59 at 9:59 a.m. in New York.

An acquisition of Virgin Media would reignite the rivalry between Malone and Murdoch, who were competitors and business partners in the U.S. TV market. The deal would also intensify the competition between the two men's companies in Europe, where they vie for the title of the No. 1 pay-TV provider.

Liberty Global, based in Englewood, distributes TV, Internet and phone services to 19.6 million customers, making it the second-largest cable company in the world, behind Comcast Corp. It has 18.4 million European subscribers, with Germany and Belgium its biggest markets in the region.

Murdoch owns shares in the Sky businesses across Europe, including about 39 percent of BSkyB and more than half of Germany's Sky Deutschland AG. His companies have more than 19 million pay-TV customers in Europe.

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John Malone's Liberty Global in talks with Virgin Media