Virgin Media ‘Underestimated’ Impact Of Sky Channel Carriage Dispute
A survey has revealed that Virgin Media could lose as many as 400,000 subscribers as a result of the loss of Sky’s basic channel package from its cable service.
The report by investment bank UBS, which is in part based on a survey by GfK of 1,000 UK TV homes, suggests that Sir Richard Branson’s company has underestimated the value its customers place on the Sky channels that Virgin Media no longer hosts.
Following a long running and very public channel carriage dispute, Virgin no longer carries channels such as Sky One and Sky Sports News on its platform, after negotiations between the two behemoths broke down (see Virgin/Sky Channel Dispute Continues).
The survey has concluded that Virgin is “not a credible threat” to Sky and its increasing range of services. Earlier this year, Freeview said it was the most popular way to watch multichannel television in the UK, having overtaken Sky.
These figures meant that Freeview was now the main method of watching television in 8.2 million homes in the UK, up from 7.7 million at the end of 2006, taking it past Sky for the first time (see Freeview Overtakes Sky).
“Our survey suggests that Sky subscribers have a low opinion of Virgin and do not regard it as a credible alternative,” stated the UBS Investment Research report. “Virgin customers meanwhile believe that many aspects of Sky’s service are better than that provided by Virgin.”
The survey aimed to look at market developments including Virgin Media’s loss of Sky’s basic channels such as Sky One, the launch of Premier League football on Setanta and the potential launch of a Sky subscription service on digital terrestrial TV (see Ofcom Could Scupper Sky Pay-TV Plans).
UBS estimates that Virgin could lose a total of around 600,000 subscribers if Sky is allowed to offer a DTT pay-TV service on Freeview, which UBS thinks Ofcom will allow, and if Virgin fails to reach a deal with Sky to restore its basic channels to cable homes.
“Virgin initially suggested that the subscriber impact of the loss of Sky’s basic channels would be negligible,” said the UBS report.
“However, in its first quarter [2007] results Virgin suggested that it was likely to lose TV customers in quarter two (see
Virgin Media Subscriptions Decline
Virgin Media Subscriptions Decline
Virgin Media Subscriptions Decline
Virgin Media Subscriptions Decline
Virgin Media Subscriptions Decline
Virgin Media Subscriptions Decline Virgin Media Could Expand Its Reach By Four Million Homes).
Virgin Media: www.virginmedia.com