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Sky keen to buy Virgin Media channels for £600 Million
# 4 May 2008, 22:59 by Cable Forum
The Guardian, reports that city sources are claiming BSkyB has set its eyes on Virgin Media owned channels such as; Bravo, Challenge and Living by considering a £600 Million bid. Sky is said to be also interested in channels under the UKTV brand of which Virgin Media owns a 50% stake, the other half owned by BBC Worldwide.
With it being rumoured that Sky wants all the channels, Virgin Media would have to buy BBC Worldwide’s share to complete a sale. The question remains as to whether or not the BBC would sell its stake although the BBC is said to be seeking significant financial backing from a private equity consortium, so they can buy Virgin Media’s stake but if it struggles to do this, it may well stick to its 50% stake, which they could well do as they would still have a final say over any new buyer due to a ‘change of control’ clause.
Virgin Media has recently announced that it wants to focus more on its broadband service by improving it and reducing churn, so money from the sale proceeds of their channels, could be seen as investment on providing higher speed internet access.
The bottom line is that Virgin Media needs to raise significant revenue in order to provide a superior broadband service. It’s year-on-year losses have widened mainly down to increases in interest charged on its debts.
The company has also seen a number of takeover approaches in these recent months from private equity groups.