As Virgin Media Builds Market Leading Portfolio of Programming, Sky Tries to Stifle Competition by Engineering Withdrawal of Basic Channels From Competitor's Service
LONDON, February 23 /PRNewswire-FirstCall/ -- Since its launch on February 8th, Virgin Media (NASDAQ:VMED) has announced plans to enhance dramatically its digital TV service with a combination of new programming and cutting edge, on-demand technology. As a result, in addition to over 100 traditional broadcast channels, its digital TV customers now have access to over 2,700 hours of on-demand programming, including a huge range of hit TV shows and highlights from the previous week's broadcast schedules. Recent content deals with the leading studios for major hit shows such as West Wing, CSI, The OC, Nip/Tuck, together with our competitively priced packages incorporating Sky Sports and Movies and the launch of Virgin Central, means that Virgin Media more than matches any content available to customers in the pay-TV market. Our aim is to build on our leading position and double our offering to 6000 hours of on-demand content over the coming months.
This expansion has coincided with negotiations to renew the contract for carriage of Sky's basic channels - including Sky One, Sky Two, Sky Three, Sky News and Sky Sports News - across Virgin Media's network.
However, following an intensive series of meetings over the last week, we now anticipate a withdrawal of these channels by Sky at the end of February. The nature of these negotiations leads us to believe that this outcome has been deliberately engineered by Sky in order to suppress competition and coerce Virgin Media's customers into switching to its service by denying them access to the basic channels. (These negotiations do not impact Sky's premium sports and movies channels which will continue to be available to Virgin Media customers.) This view is reinforced by Sky's decision to broadcast, at the height of negotiations on 12th February, a series of promotions claiming that the channels were about to disappear from Virgin Media's network. This was nothing more than a heavy-handed attempt to exert undue influence on the negotiating process.
Despite a dramatic and sustained decline in the basic channels' popularity in Virgin Media households (they have lost an average of 7 per cent of their cable viewing every year over the past four years) and the disappointing performance of some recent programming, Sky has consistently demanded a carriage fee more than double the existing arrangement. Virgin Media recognizes that the basic channels have been part of its TV line up for many years and has responded with a series of offers designed to ensure they remain so. Sky, however, continues to demand a price that bears no relation to the channels' popularity and is radically out of line with the way it values competitors' channels on its own network.
It remains Virgin Media's position that negotiations are ongoing and we continue to seek an agreement on terms that make commercial sense for both parties. However, as things stand, Sky's demands offer no prospect of us being able to reach a commercially viable agreement to continue carriage of these channels on Virgin Media's platform.
If Sky withdraws its channels, Virgin Media will divert any money saved into continuing the transformation of our TV service with an extensive range of new channels and programming. This will include further additions to our existing on-demand library and ensure our TV service more than matches anything on offer from Sky.
For Sky meanwhile withdrawal will mean an estimated GBP45 million a year reduction in advertising revenues, over and above the subscription fees they will forego. Their willingness to do so speaks volumes about their desire to suppress meaningful competition.
This follows a largely-overlooked press statement by Sky on February 8th announcing plans to remove a number of free channels from the Freeview platform, depriving over 7 million Freeview viewers access to those channels. Sky indicated that it intends to use these Freeview slots to offer four subscription channels on terms that have not yet been announced.
Commenting on the anticipated withdrawal of Sky's basic channels, Steve Burch, President and CEO of Virgin Media said: "Throughout its history, Virgin has challenged the attempts of dominant corporations to manipulate markets, stifle competition and dictate consumer choice. It has done so simply by giving consumers a better deal and Virgin Media is going to do the same. Sky's behavior is a heavy handed and anti-competitive response to that challenge and consumer choice has been reduced as a result. I'm pleased, however, that at a time when they're taking content away, Virgin Media is giving people more." For more information, visit http://www.virginmedia.com/
Contact:
M:Communications
Lisa Gordon +44(0)20-7153-1548
Nick Fox +44(0)020-7153-1540
Notes to Editors:
In terms of entertainment, choice and convenience, Virgin Media's newly-expanded service will beat anything its competitors can offer. It will also make Virgin Media's 3.3 million TV customers the front runners in a new generation of personalized on-demand TV and raise the stakes across the whole of the UK's fast-changing TV industry.
The ground for Virgin Media's TV revolution has been laid over several months, culminating in a string of agreements with leading studios, including Warner Brothers, Home Box Office (HBO), The Walt Disney Company's Buena Vista International Television, Channel 4 and Alliance Atlantis. With these deals come the rights to a wide range of leading shows, such as West Wing, CSI: Crime Scene Investigation, CSI: Miami, Criminal Minds, The Sopranos, Six Feet Under, Entourage, Curb Your Enthusiasm, Band of Brothers, From the Earth to the Moon, The OC, Nip/Tuck, Little Britain, Grey's Anatomy and Alias.
Virgin Media customers will get these shows as part of Virgin Media's ground-breaking TV on demand service. This allows you to watch the programme you want, when you want and to pause, rewind and fast-forward with all the ease of a traditional DVD player.
The new shows join Virgin Media's existing line-up of 2,700 hours of on demand programming, which includes Lost, Desperate Housewives, Cold Feet, Cracker, The Vicar of Dibley, as well as highlights from the previous weeks broadcast schedules.
Thanks to Virgin Media's next generation technology, its on demand service is not, like most of its imitators', limited to a few hours of programming downloaded to your set top box. The unrivalled size of its library, combined with a choice of over 100 traditional broadcast channels and a high specification personal video recorder, helps make Virgin Media's TV service the most comprehensive and advanced in the UK.
One of the flagships of Virgin Media's re-vamped service will be Virgin Central, a new and highly innovative kind of TV channel, combining the simplicity and familiarity of a traditional TV channel with the choice and control of on demand. The channel will feature a 24-hour menu of episodes from a regularly-updated selection of popular TV shows. By pressing a button and using a simple on-screen guide, viewers will have instant access to different episodes of the show they select.
Commenting on the overhaul of Virgin Media's TV service, Chief Operating Officer Neil Berkett, said: "Virgin's success is built on a simple idea: giving the consumer more. Virgin Media will fulfill this promise by turning control of our vast library of programming over to our customers. We're going to give them something no other company can. And this is only the start." Virgin Media's on-demand service complements a range of over 100 traditional broadcast channels, including all the nation's favourites and a wide range of documentary, current affairs including BBC News 24. DATASOURCE: Virgin Media CONTACT: Contact: M:Communications, Lisa Gordon +44(0)20-7153-1548, Nick Fox +44(0)020-7153-1540
|