No more Sky 1,Sky 2, Sky 3, Sky News, Sky Sports News from Thurs

Virgin cable viewers face blackout of Sky hit shows


· Murdoch and Branson companies at loggerheads
· Denial that price for new deal is 'stupidly high'

Katie Allen, media business correspondent
Saturday February 24, 2007
The Guardian


Millions of Virgin Media customers face losing hit shows 24 and Lost mid-season next week after negotiations to renew the cable group's Sky One deal broke down.
Rupert Murdoch's BSkyB and the recently rebranded NTL Telewest business had been trying to agree a price for Sky's basic channels, which also include Sky Sports News and Sky News. But the cable group said yesterday that the talks had stalled after Sky declined an offer described by one Virgin insider as "almost stupidly high for what we are actually getting".

The row follows bad blood between Sky and Virgin Media - particularly its biggest shareholder, Sir Richard Branson - after Sky paid almost £1bn for a stake in ITV and thwarted NTL's planned takeover of the commercial broadcaster. The stalemate means series such as The Simpsons could go off air for Virgin viewers from Thursday when the existing deal runs out. Nor are Virgin customers likely to receive a discount on their current charges to compensate for the loss. Virgin said they would invest the money saved in "better content".

Sky says the talks are continuing and media experts say such last-minute scraps over carriage fees are posturing and nothing new. But last night Virgin was doubtful of a deal. "Considering every single sign from Sky after months and months of to-ing and fro-ing, I can't see it being resolved," said James Kydd, Virgin Media's head of marketing.

Analysts believe Virgin pays around £20-30m for the collection of channels. Virgin says Sky is demanding a doubling in price. Sky denies this. It is understood that Virgin has offered an increase despite the channels losing cable audience share consistently over recent years.

A Sky statement said: "We categorically reject their claims that we have broken off negotiations or that we are seeking to more than double the price of these channels." The question for Virgin's 3.3 million cable customers is what they will get in return for losing Sky One and Sky Two. Virgin says the millions saved from not paying for Sky channels will be put into making and buying new shows.

Prices will not be cut but there are likely to be more deals like the one earlier this week with Warner Brothers to show hundreds of episodes of US hits such as The OC and West Wing.

The cable group has closed the gap with Sky by signing a series of deals with leading content owners to offer programmes on demand, though these do not include 24 and mainly cover older series. The first two series of Lost will be available to Virgin subscribers on demand, for instance.

The fact that there is now a more credible rival for Sky should be good news for consumers in the long-run but for now the move towards more exclusivity means lower value for money, according to the price comparison site uSwitch.

"We are getting to the point where if you really want everything you almost need to sign up to both. The customer is potentially going to lose out," said uSwitch's Chris Frost. "Virgin Media customers could lose value for money as there will likely be a break between the Sky channels going off and the new shows invested in coming on the screen."

Marketing insiders see the debacle over the Sky channels as the satellite giant using the leverage of Sky One, which has many of the most viewed programmes available on Virgin, to scupper any revival in the cable industry.

Sky claimed yesterday that "customers switching from NTL/Virgin to Sky are saving hundreds of pounds a year."

But analysts are divided over whether losing 24 and Lost will make customers cross over to Sky, which already has more than 8 million subscribers.

"I think that the idea that Virgin cable customers would churn [move] to Sky satellite simply because they can't see Sky One or Sky News is quite far-fetched," said one, adding that Sky has more to lose in terms of dropped advertising revenues if the channels no longer run on Virgin.

Others point out that a few tens of millions in lost advertising revenues for Sky could be recovered in subscriptions from new customers.



Do not adjust your set: TV firms battle over channels
STEWART PATERSON February 24 2007

Hundreds of thousands of television viewers may miss some of the most popular programmes after a dispute between two of the biggest cable and satellite broadcasters over fees.

Virgin Media cable customers face losing the basic Sky channels next week, showing top American shows such as The Simpsons and 24.

BSkyB is planning to remove Sky One, Two and Three channels as well as Sky Travel, Sky News and Sky Sports News from the Virgin Media service after the networks failed to agree a fee.

Virgin has claimed the move has been "deliberately engineered to coerce Virgin customers into switching to its service by denying them access to the basic channels".

It said Sky had doubled the price of its channels out of proportion to their popularity and out of step with what they pay competitors to show their content on Sky packages.

Other top US programmes popular on the Virgin Media network would still be available but on other channels. Virgin has agreed deals with Warner and HBO to show programmes such as Lost, The West Wing and Nip/Tuck, but on channels unfamiliar to viewers.

Virgin Media is also launching an interactive TV-on-demand channel, called Virgin Central, airing shows including the Sopranos, CSI, Little Britain, The West Wing and Nip/Tuck.

The dispute does not affect premium channels such as Sky Sports and Sky Movies.

Virgin accused Sky of heavy-handedness and stifling competition. Steve Burch, Virgin Media chief executive officer, 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 customers a better deal and Virgin Media is going to do the same. Sky's behaviour is a heavy-handed and anti-competitive response to that challenge and consumer choice has been reduced as a result."

Talks broke down late on Thursday with Virgin Media almost giving up hope of a reconciliation. It said it was hoped negotiations would continue, despite claiming Sky broadcast promotions last week suggesting the channels were about to disappear from the Virgin network.

BSkyB has already revealed it is planning to remove its channels form the Freeview network. Broadcast regulator Ofcom is looking at the implications the withdrawal will have on the popularity of Freeview. Sky is set to broadcast the channels - Sky Three, Sky News and Sky Sports News - on a terrestrial pay TV service, set for launch in the summer.

A Sky spokesman said: "With several days remaining and active discussions continuing, we're surprised and disappointed that NTL/Virgin chose to attack Sky and suggest, prematurely, that their customers will miss out on Sky basic channels from March 1.

"We categorically reject their claims that we have broken off negotiations or that we are seeking to more than double the price of these channels."

BSkyB has also been referred to the media regulator by the Advertising Standards Authority over the promotions aired last week suggesting its five channels could be withdrawn from Virgin Media. Complaints from 140 cable customers were received concerning the adverts.



Q. Will viewers miss their favourite shows?

A. Virgin Media says it has agreed deals with other US networks such as HBO and Warner to provide hit shows such as Lost and Nip/Tuck.
Q. When will the channels disappear?

A. Virgin says from March 1. BSkyB says it is not final yet, the decision rests with Virgin.
Q. Where can customers go for more information?

A. www.virginmedia.com

 

just to let irish users know that this wont affect them as ntl ireland isnt owned by virgin and is a completely seperate company.

 

I never watch those channels so won't be missed by me, It's not the first time Murdoch has taken this stance and backed down at the last minute,. Why would he want to lose £30M.