Virgin Media to Pursue Legal Action Against Sky

LONDON, March 5: Virgin Media said today that it will pursue
legal action against BSkyB if their carriage dispute for five Sky-branded
networks is not resolved within 30 days.

Sky One, Sky Two, Sky Three, Sky News and Sky Sports News
were pulled off cable platform Virgin Media last Wednesday after the two
companies failed to agree on the financial terms of a new carriage deal. The
move deprives Virgin Media’s more than 3 million customers of hit shows like Lost and 24.
Virgin Media says Sky sought to increase the fees to about £48.5 million per
year.

In a statement today declaring its intention to pursue legal
action, Virgin Media said it “is challenging the pay-TV giant for its abuse of
dominance.”

Virgin Media is seeking carriage of Sky channels “at a
reasonable commercial rate,” along with “fair payment” by the satellite
operator for carriage of Virgin Media channels like LIVING and Bravo. Virgin
Media maintains that it was coerced into accepting an 85 percent reduction in
the price Sky pays for the channels. “This gaping disparity in channel
valuation is the hallmark of Sky's systematic abuse of dominance and their
longer term objective of suppressing existing and emerging competition from
other companies,” said the Virgin Media statement. “Throughout both sets of
negotiations, Virgin Media have proposed relatively small adjustments to the
status quo (mostly in Sky's favor). Sky, by contrast, have consistently tried
to use their market power to fundamentally change in their favor the dynamics
of the pay-TV market.”

Virgin Media will also seek damages if the dispute is not
resolved. CEO Steve Burch commented: "We are not interested in prolonging
this dispute any longer than necessary but we will not allow Virgin Media or
our customers to be the victim of Sky's market power. In the interest of the
consumer, we want these issues resolved quickly."