Sky and Virgin stick to guns as deadline nears

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Sky and Virgin stick to guns as deadline nears

BSkyB and Virgin Media were continuing to lock horns today, as the clock ticked down ahead of tomorrow night's deadline for a deal to carry Sky channels on cable.
The rival media companies are at odds over the price Virgin pays to carry Sky's basic channels, such as Sky One and Sky News, on its cable network.

Sky said it had trimmed the overall price it was planning to charge for the channels and suspended the element of the charge covering the three channels it plans to take off Freeview later in the year.

But it is understood Sky's proposal still involves a minimum revenue guarantee that equates to nearly double current rates.

Sky is also reported to be drawing up plans to sell its channels directly to cable customers if they cannot reach a deal with Virgin, though industry insiders doubted the satellite company could do this.

Both companies are sticking to their guns and it seems a real possibility that no deal will be reached by tomorrow night.

That means 3.3 million cable TV viewers would lose access to the basic channels and with them hit shows such as Lost, 24, Nip/Tuck and Battlestar Galactica.

The dispute does not cover Sky's premium sports and movies channels, however.

If Sky were to pull its channels, it would cost the company up to £60m in lost advertising and carriage revenues, Sky has admitted.

Although it might hope to make some of that up by snaring defectors who cannot live without Sky's basic channels, analysts are unsure how many people would fall into that category.

Virgin has said it would plough any savings into new content deals, though the company insists it wants to carry the Sky channels.

The row is the latest example of bad blood between the companies since Sky thwarted Virgin's hopes of merging with ITV in November by buying a 17.9% stake in the commercial broadcaster.

That deal is to be scrutinised by the government, after trade secretary Alistair Darling ordered a joint investigation by media regulator Ofcom and the Office of Fair Trading yesterday.

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