Virgin Media has admitted that the loss of BSkyB's basic channels at the beginning of March "caused customer confusion and affected the acquisition of new subscribers". Sky's basic channels were removed after both sides failed to agree carriage fee terms. The dispute is now being heard in the High Court, while media regulator Ofcom reviews the UK's pay-TV sector. Unveiling first-quarter results, Virgin Media today said the loss of Sky's basic channels had little impact in the period, with total television net additions of 36,100, down from 38,500 in the previous quarter.
"Sky's removal of its basic channels did not significantly impact churn in the first quarter, since customers are required to give 30 days' notice in order to cancel their contracts," said Virgin Media. "The impact on churn, therefore, will become clear in subsequent quarters."
At the end of Q1 Virgin Media had 3.39m television subscribers on its cable network. Of those, 3.08m were digital cable subscribers, up from 2.79m digital subscribers a year ago. Total broadband subscribers reached 3.4m, up from 3.05m a year ago.
Consumer revenues fell from £644.4m in Q4, 2006, to £637.3m in Q1. Total group revenues came in at £1.022bn, down from £1.082bn. Virgin Media posted a Q1 operating loss of £15.3m compared with an operating profit of £9.2m in Q4, 2006.
Virgin Media CEO Steve Burch said: "Our first quarter of 2007 shows strong growth in TV and broadband, while fixed line telephone continues to struggle. We are encouraged by the decline in churn and the impact that our rebrand message is having on consumers.
"The £25m incremental spending on rebrand and marketing will have long term benefits as we establish our position in the marketplace. With reinvigorated products and packaging, and a focus on cash flow growth, the outlook for our business remains strong"
Last week Sky warned that its operating profits could be down by between £15m and £20m for the year to the end of June if its basic channels remained off Virgin Media's cable platform.
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