Sky Proposes Direct Approach to Virgin Customers

LONDON, February 28: With the deadline for BSkyB and Virgin
Media to hammer out a carriage deal just hours away, the satellite platform has
proposed a new alternative, according to local reports: retailing the five
basic channels, including the flagship Sky One, directly to the cable
platform’s customers.

Virgin Media maintains that Sky is asking for too much to
renew carriage of Sky One, Sky Two, Sky Three, Sky News and Sky Sports News,
with the contract expiring tonight at midnight. If the channels are pulled,
Virgin Media subscribers will lose access to such hit shows as 24, which airs on Sky One.

According to MediaGuardian, a Sky spokesperson noted: “We
believe absolutely in the quality of our channels and their strong appeal to
customers, but we've offered a simple alternative if Virgin really doesn't
think they're worth 3p per customer per day. At no cost or risk to Virgin,
we'll retail our basic channels directly to cable customers on the Virgin Media
network to ensure that no one misses out on the TV they enjoy."

In response, according to the British newspaper, Virgin
Media CEO Steve Burch said: “It's a bold-faced attempt to take our network from
us. It's a ludicrous proposal and they know it's ludicrous. We are not going to
let them steal our network; they're far more dominant than they should be. It's
a ridiculous request. It's classic Sky to hijack our network, to continue to
have not only their dominance on their network but to take our network as well.
It's very misleading, an attempt to distract and confuse people."

With negotiations at an impasse, Virgin Media had suggested
arbitration. As part of the arbitration, Virgin was attempting to renegotiate
its deal with Sky for carriage of its own cable channels LIVING, Bravo and
Trouble. According to the Guardian, Virgin Media claims that it was forced into
making a deal that slashed the prices Sky is paying to carry the entertainment
networks by 85 percent. "Using their market power and dominance they were
able to force us to sign an agreement," Burch is quoted as saying.

Sky has rejected the arbitration proposal: "Trying to
involve a third party and unpick the agreement for Virgin's channels on the Sky
platform would be an unnecessary delay and distraction," Sky said in a
statement. "Our debate with Virgin comes down to how strongly you believe
in the value of Sky's basic channels."