Virgin Media loses customers
UK cable operator Virgin Media stated that the company lost some 70,300 customers in the second quarter, largely due to its on-going spat with arch rival British Sky Broadcasting (BSkyB).
A channel agreement between Virgin Media and BSkyB to keep non-premium Sky channels ended at midnight on 1 March 2007. Virgin Media and Sky failed to reach a new agreement on the issue, and Sky reacted by posting a letter to the public in major UK newspapers on 28 February 2007. Subsequently , BSkyB pulled its ‘basic’ channels like Sky News and Sky One from the cable platform. Some 40,000 customers left Virgin media, as a result of its dealings with BSkyB
It seams that the merger of Telewest, NTL and Virgin Mobile last year also a reason for losing about 30000 land line customers.
Virgin Media offers combined landline, TV, broadband and mobile packages to roughly half the UK’s population through its cable network. Its mobile user base fell by about 46,500 and virgin Mobile is now far behind BSkyB and BT Group.
There is a plan to sell the company in view of the unfavourable performance, but the action may wait till a more stable debt market environment is prevailed. Virgin Media a has appointed Goldman Sachs to conduct a strategic review, effectively hoisting a ‘for sale’ sign over the company. It is believed that the cable group has been valued at around 23 billion UD dollars by Carlyle Group in Jul.
Revenues too fell down from 1.021 billion in the previous three months to 995 million in the second quarter, due to the spat with BSkyB. It is believed that the number of first-round bids fell well short of the company’s hopes, although a number of private equity and cable groups, including US giant Liberty Global Inc, have reportedly trying to buy Virgin Media.