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Last Updated: Friday, 23 February 2007, 13:59 GMT
Virgin slams BSkyB in TV dispute
By Andrew Verity
BBC Radio Five Live, Wake Up To Money

Model Dita Von-Teese launching Virgin Media
Virgin Media was launched amid much fanfare
The head of Virgin Media has accused BSkyB of "bullying" and "arrogance" after talks broke down over showing Sky One and other channels on cable TV.

Virgin Media is to drop the Sky Basics TV package, which includes Sky Travel and Sky Sports News, after Sky raised the fees it charged the cable firm.

Virgin Media was formed from the merger of NTL and Virgin Mobile.

BSkyB said it was "surprised and disappointed" by the comments, and said it stood for "choice and competition".

"Sky has negotiated with NTL/Virgin in good faith and has shown flexibility on price," the broadcaster said in a statement.

"We categorically reject their claims that we have broken off negotiations or that we are seeking to more than double the price of these channels."

BSkyB added that it wanted its basic channels to remain available to Virgin Media subscribers.

Too expensive

Virgin Media chief executive Steve Burch said Sky had been asking "nearly double" the price it had previously charged the cable TV operator to continue showing the Sky channels on its network.

We just weren't going to pay a ridiculous price that would have to be passed on to our customers
Steve Burch, Virgin Media chief executive

When Mr Burch first refused to pay the asking price, Sky retaliated by showing adverts urging cable TV customers to contact Virgin Media's customer service helpline and demand the cable TV operator show Sky One.

Mr Burch told the Wake Up to Money programme on BBC Radio Five Live: "We frankly believe they never had an intent to reach an agreement with us.

"All their actions - advertising, bullying tactics claiming we didn't care about Sky's basic package - and the price they asked was just so far out of reality, we just believe it was engineered so we wouldn't reach an agreement.

"We sat down and negotiated with them in good faith. Last night we made a final offer.

"They not only rejected it but indicated they were not going to go further with negotiations even though the contract didn't expire until next week. And they indicated to us that they had planned a PR campaign for this weekend to show we wouldn't be carrying Sky Basics any more."

James Healey, senior media analyst at Ernst & Young, said the dispute between the two broadcasters was not surprising.

"Given that Sky has recently substantially reduced the amount it pays for Virgin Media's Flextech channels, Virgin Media was unlikely to accept paying double for the Sky Basic channels," he said.

Other deals

Sky One includes some popular series, such as 24, Lost and new episodes of The Simpsons.

But Virgin Media said it was confident it could compete with Sky if it did not show Sky One.

"We've been going out and signing deals with HBO, Buena Vista and Channel Four for TV shows and video on demand which will more than replace the loss of Sky One," said Mr Burch.

"We just weren't going to pay a ridiculous price that would have to be passed on to our customers."

Last year, Virgin Media's biggest shareholder, Sir Richard Branson, was infuriated by Sky's decision to buy more than 1bn worth of shares in ITV after Virgin Media had declared an interest in buying it.

The Sky shareholding effectively blocked Virgin Media's takeover plans.

Virgin Media's Steve Burch explains why talks collapsed

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