Virgin can carry Sky HD channels as VMtv sale is agreed

UK pay-TV operator BSkyB has agreed to pay rival Virgin Media £160m (€192m) in cash for its channel business VMtv. The companies have also agreed a deal that could see Virgin Media carry Sky’s HD channels on its cable platform.

The acquisition of VMtv involves Sky acquiring Living, Livingit, Challenge, Challenge Jackpot, Bravo, Bravo 2 and Virgin1. Sky will not license the Virgin brand and will announce the new channel brand for Virgin1 in due course. The acquisition means Sky will no longer pay carriage fees to Virgin Media for distributing the VMtv channels. Sky will start selling advertising for the channels from January 2011.

A new carriage agreement will see Virgin Media carrying the VMtv channels, along with Sky’s basic channel line-up, including Sky1 and Sky Arts. For an incremental wholesale fee, Virgin Media will also have the option to carry any of Sky’s basic and premium HD channels for the first time. This could see the cable operator adding Sky Sports HD 1, Sky Sports HD 2 and all Sky Movies HD channels to its line-up. Virgin Media will also offer content from Sky’s basic and premium channels, including thje VMtv channels, via its on-demand service. 

Jeremy Darroch, CEO, BSkyB, said: “VMtv is an attractive investment opportunity which complements our existing content business and delivers strategic and financial benefits. We are pleased that, through commercial negotiation, we have been able to ensure wide distribution of our channels to a growing pay TV universe.”

Neil Berkett, CEO, Virgin Media, said: “The sale of our channels business has generated substantial value. Together with the new commercial agreements we’ve announced today, it will allow us to focus more closely on our strategy of exploiting Virgin Media’s super-fast connectivity to offer our customers a range of the very best content through a highly versatile next generation entertainment application.”

Completion of the agreements is conditional on obtaining merger control clearance in the Republic of Ireland.