Loss of Virgin Carriage Could Hurt Sky’s Profits By Up to £20 Million

LONDON, February 26: If Virgin Media and BSkyB are unable to reach a carriage renewal for five Sky networks this week, the satellite operator’s profits could be cut by as much as £15 million to£20 million.

Sky said in a statement today that its profits would be hurt as a result of the lost carriage fees and a reduction in ad revenues. As reported last week, Virgin Media and BSkyB have been unable to come to an agreement on carriage for Sky One—home to such popular series as Lost and 24—Sky Two, Sky Three, Sky News and Sky Sports News. Virgin Media said it is expecting Sky to pull the channels when the current contract expires at midnight on Wednesday, February 28. Virgin Media has accused Sky of demanding “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.” The cable platform also says that this is a deliberate ploy by Sky to deprive Virgin Media subscribers of its basic channels in a bid to boost its own subscriber base.

Sky countered today with a statement saying that it had “negotiated in good faith with Virgin Media and shown flexibility on price.”

Sky further added that it had increased investment in its basic channels by 68 percent over the last five years to £200 million per year. The platform also said that the “most watched pay TV programs in cable households are on the Sky basic channels. We are simply seeking a fair price so that we can continue to provide the great shows and choice that Virgin Media customers value.”

The satellite platform also said it was still willing to negotiate with Virgin Media. Jeremy Darroch, Sky’s CFO, noted: “We are disappointed that Virgin Media appear to have walked away from negotiations. Sky offered more channels to Virgin Media than ever before. We have invested in developing our channel offering and sought a fair price which reflects that fact. With three days still to go before the deadline, we hope that Virgin Media will focus on getting a deal done rather than on their PR offensive.”