BSkyB is reportedly closing in on buying UK cable operator Virgin Media’s TV channels. These are entertainment channel Virgin 1, Living, Bravo and Challenge. Mostly they just show American imports such as Terminator: The Sarah Connor Chronicles, Grey’s Anatomy and Blade. However, the deal’s significant because Virgin 1 has a slot on the hugely popular Freeview digital terrestrial TV service. BSkyB could then rebrand the channel, and use it to promote its Sky TV pay-TV service. BSkyB is understood to be offering around £150-160 million ($217-232 million) for VMTV.
There are those inside VMTV for whom the idea of selling to BSkyB – Virgin’s bitterest rival – sticks in the throat. They would rather VMTV be sold to either Time Warner or ITV for less money. Time Warner tried to buy VMTV last year, but BSkyB offered £40 million more than either Time Warner or Viacom were prepared to pay. New ITV boss Adam Crozier has talked about how sorting out the broadcaster’s pay TV proposition is right at the top of his in-box. Buying the Virgin channels would save him from having to take existing ITV channels behind a pay-wall. But ITV doesn’t have enough cash to buy VMTV outright; it would have to be a share swap or asset trade.
Virgin agreed to sell the channels to BSkyB in principle last September. Since then there’s been protracted negotiations over what Virgin must pay BSkyB to carry its former channels on its own cable TV network. Buying VMTV will save Sky the £30 million a year it pays Virgin to distribute the channels. The cable operator must also ensure it has continued access to BSkyB’s premium sports and movie channels. “It’s quite difficult to create a bombproof carriage deal for the next 10 years,” analyst Claire Enders of Enders Analysis tells me.