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    British Sky Broad. - Sky basic channels carriage

    This is a discussion on British Sky Broad. - Sky basic channels carriage within the Sky news and announcements forums, part of the SkyUser Announcements category; British Sky Broadcasting Group PLC 26 February 2007 As has been widely reported, Sky is currently in discussions with Virgin ...

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      British Sky Broad. - Sky basic channels carriage

      British Sky Broadcasting Group PLC
      26 February 2007

      As has been widely reported, Sky is currently in discussions with Virgin Media about the carriage of Sky basic channels(1).

      The Company wishes that the Sky basic channels that Virgin Media currently carries, including Sky One, Sky Two, Sky Sports News and the award-winning Sky News, remain available to Virgin Media customers and has negotiated in good faith with Virgin Media and shown flexibility on price. More has been offered to Virgin Media than ever before, including HD services and new channels such as
      Sky Three and Sky Arts, the UK's only dedicated arts channel.

      Sky has increased investment in its basic channels by 68% over the last five years to around 200m per annum and, as a consequence, the most watched pay TV programmes in cable households are on the Sky basic channels. We are simply seeking a fair price so that we can continue to provide the great shows and choice that Virgin Media customers value.

      Despite the constructive approach adopted by Sky throughout these negotiations, the recent behaviour of Virgin Media appears at odds with a genuine desire to conclude a commercial Agreement and at this time there exists the real possibility that agreement will not be reached before expiry of the current contract at midnight on 28th February, 2007.

      Unlike the open satellite platform, Virgin Media's cable network is closed. The only way Sky's channels can be available to cable viewers is if Virgin Media chooses to carry them. As a consequence, Sky's basic channels would become unavailable to all Virgin Media customers for an indeterminate period of time.

      Sky receives revenue in relation to the carriage of its basic channels on Virgin Media's cable network, both directly from Virgin Media in the form of monthly carriage fees and, indirectly, via advertising on those channels which are viewed within Virgin Media households. The Company estimates that the financial impact on Sky, were an agreement not to be concluded in relation to the remainder of the year to 30 June 2007, would be a reduction of 15 to 20 million of operating profit. This reflects the impact of lower wholesale carriage fees and lower advertising revenues. It does not include any of the future benefits or costs associated with accelerated customer growth should cable customers decide to switch to Sky. This would include subscriber acquisition costs and any revenues received either through on-going subscriptions or one-off installation and equipment costs.

      Sky continues to be willing to negotiate with Virgin Media in good faith at any time.

      Jeremy Darroch, CFO said:

      'We are disappointed that Virgin Media appear to have walked away from negotiations. Sky offered more channels to Virgin Media than ever before. We have invested in developing our channel offering and sought a fair price which reflects that fact. With three days still to go before the deadline, we hope that Virgin Media will focus on getting a deal done rather than on their PR offensive.'
      Last edited by NewsreadeR; 27-02-07 at 01:21 AM.
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