BSkyB and Virgin Media reach agreements on sale of VMtv and channel distribution

[NewsreadeR]

British Sky Broadcasting (Sky; LSE:BSY) and Virgin Media (NASDAQ:VMED; LSE:VMED) today announced that they have reached agreement for the acquisition by Sky of Virgin Media Television (VMtv). The companies have, in parallel, agreed to enter into a number of agreements providing for the carriage of certain Sky standard and high-definition (HD) channels.

The agreements cover the following:

• Sky will acquire VMtv for a total consideration of up to £160 million in cash, with £105 million paid on completion and the remainder paid following the regulatory process. The acquisition will expand Sky's portfolio of basic pay TV channels and eliminate the carriage fees it currently pays for distributing VMtv channels on its TV services.
• Sky will assume responsibility for selling advertising for the newly acquired VMtv channels from January 2011.
• New carriage agreements will secure wholesale distribution of Sky's basic channel line-up, including Sky1 and Sky Arts, and the newly acquired VMtv channels, on Virgin Media's cable TV service.
• For an incremental wholesale fee, Virgin Media will, for the first time, have the option of carrying any of Sky's basic HD channels, Sky Sports HD 1 and Sky Sports HD 2, and all Sky Movies HD channels.
• Virgin Media will make available through its on-demand TV service a range of content from Sky's basic and premium channels, including the newly acquired VMtv channels. Virgin Media will also have access to red button interactive sports coverage and the opportunity to deliver selected standard definition programming over the internet.

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

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."

Additional information:

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.

Press releases - 2010

[Huddy]

With this being the case are they going to Free to View, e.g only available with sky viewing card or will they be free to air so they can be added on a freesat box?

[mnavarra]

Anyone aware of when they will start transmitting the new channels like Living HD etc on Sky - will it not be as easy as updating EPG and pumping it out from source as is but onto Sky platform?

Any ideas?

[Mr Spouse]

With this being the case are they going to Free to View, e.g only available with sky viewing card or will they be free to air so they can be added on a freesat box?

None of the channels are FTA now, so why do you think Sky acquiring them should change this? I can't see Sky helping Freesat one little bit!

[paulcarrm9mx]

None of the channels are FTA now, so why do you think Sky acquiring them should change this? I can't see Sky helping Freesat one little bit!

Virgin 1 is free view as well sky

[deadman1984]

well im not suprised like as loads of companys are merging together ie lloyds and halifax i think if im correct then amd and ati so but i supose both companys are getten somthing out of it virgin gets some of skys channels like movies sports etc and sky gets some of virgins channels like living tv etc

[NewsreadeR]

No matter what anyone thinks about Sky, they have some excellent decision makers, and they will almost certainly come out of this better than VM - All the advertising revenue etc on those channels as well as then renting them out to other providers.

You can guarantee Sky will be quids in on the deal, and as per usual, willing to invest in the future. Unlike others.

[Faust]

I think we should all be worried, very worried as this is Sky stifling competition again. I think this matter should be referred to the monopolies board as it's not in the public interest. However, I doubt this shower that are in now along with their LibDem collaborators will do anything. Probably be a thank you for supporting them in the election.

[dms05]

I think we should all be worried, very worried as this is Sky stifling competition again. I think this matter should be referred to the monopolies board as it's not in the public interest..

Anyone could have bought the VM channels. However only Sky took the risk of buying them. Why should genuine commercial risk taking be referred to anyone? The problem isn't that Sky are predatory but that all their competitors (including BT) are timid and won't risk anything. When Sky makes a success of a venture, after taking all the commercial risk, these same competitors then claim foul and want regulators to intervene - why didn't the likes of BT take the initial risk?

[Faust]

Anyone could have bought the VM channels. However only Sky took the risk of buying them. Why should genuine commercial risk taking be referred to anyone? The problem isn't that Sky are predatory but that all their competitors (including BT) are timid and won't risk anything. When Sky makes a success of a venture, after taking all the commercial risk, these same competitors then claim foul and want regulators to intervene - why didn't the likes of BT take the initial risk?

Removed Have you ever studied Murdoch's business empire and the dealings it has taken over the years, not to mention how it treated its workers? Quite unbelievable, I see now why we have elected this current government.