Sky and Virgin Media launch battle for subs

by Colin Grimshaw, Media Week 27-Feb-07, 10:11

LONDON - Sky and Virgin Media are preparing a marketing blitz to their subscribers following the breakdown of negotiations over the continuing coverage of Sky channels, including Sky One and Sky News, on the Virgin Media cable platform.

Virgin Media appears to have given up any hope of reaching a settlement and continues to claim that Sky is attempting to charge close to double the amount it previously received.

However, Sky insisted that talks were ongoing, although one insider described the chances of reaching a settlement as "slim".

Sky is set to lose between £50m and £60m in carriage and advertising revenue if the channels are pulled, and analysts estimate it would need to recruit around 150,000 new subscribers to replace the income loss. Media Week exclusively revealed Sky was threatening to pull shows off cable last month (16 January, page 5).

Meanwhile, Sky is set to launch a massive outdoor campaign from 1 March with the message: "You can still get Lost on Sky, but not on Virgin Media."

This will be backed up with direct marketing door-drops. Virgin Media claimed Sky is confusing Virgin Media subscribers by cold-calling them and suggesting that they would not be able to receive Sky Sports any more.

Virgin Media chief executive of content Malcolm Wall said an announcement would be made on Thursday regarding plans for replacing the channels - Sky One, Two and Three, Sky News and Sky Sports News - with other content.

He declined to say whether this would include new channels or programme acquisitions.

Over the weekend, Virgin Media announced it had secured a deal with Buena Vista International Television to feature the first two series of Lost - the third series is being shown on Sky One - as TV-on-demand services from August.

Virgin aims to increase its Virgin Central on-demand library to 6,000 hours of programming, including West Wing, CSI, OC and Nip/Tuck.

Virgin Media's marketing efforts are expected to focus on three themes: The value of Virgin Central; the opportunity to receive Sky Sports cheaper on Virgin than Sky; and the value of the V+ PVR box, which is free to subscribers who pay a £10 monthly supplement.