Carlyle, the US private equity company bidding for Virgin Media, could axe the Virgin brand name if its takeover is successful.
Yesterday’s
Observer reported that the move, which would cut ties with Sir Richard Branson, could pave the way to a reconciliation with Sky following the dispute over Virgin’s carriage of the Sky’s basic channels.
Virgin Media and Sky have been at loggerheads since Sky acquired a 17.9% stake in ITV last year (see Sky ITV Shares Investigation Goes To DTI).
The possible ditching of the Virgin name by Carlyle, which is believed to have offered around £11.5 billion for Virgin Media (see Private Equity Firm Makes Virgin Media Bid), has come as a shock to industry observers who see the brand name as a big selling point.
The Observer report quotes an unnamed source as saying: “Virgin Media has spent £25 million promoting the company which only came into existence about six months ago. It seems odd that Carlyle is ready to write that money off and start again, especially as Virgin strikes a chord with the British public.”
However, some City sources say that Carlyle’s senior executives see the move as a way to repair relations with Sky.
Branson is Virgin Media’s largest shareholder with a 10.5% stake in the company, and by all accounts, is keen to retain some influence at the cable giant.
For the first quarter of 2007, Virgin Media announced total revenue of £1 million, with the group’s customer base dropping to 4.81 million with a net loss of 46,900 subscribers (see Virgin Media Releases First Quarter Results).
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