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Last Updated: Thursday, 24 May 2007, 09:41 GMT 10:41 UK
Q&A: Sky and Virgin Media TV row
Model Dita Von-Teese launching Virgin Media
Virgin Media recently relaunched with great fanfare
The Competition Commission is to investigate BSkyB's purchase of a 17.9% stake in ITV.

The share buy damaged relations between Virgin Media and Sky, with Virgin boss Richard Branson claiming that Sky wanted to prevent him taking over ITV.

Later, Sky and Virgin failed to agree to a fee for the Sky Basics TV package - which includes Sky One and Sky Sports News - leading to those channels being unavailable to Virgin Media viewers.

Q: Why has this happened?

It depends on who you believe.

Virgin Media says it believes that Sky is trying to "coerce" Virgin customers into switching providers by denying access to basic channels.

Sky says the dispute has come about purely because Virgin refuses to pay its asking price to continue carrying the channels.

It denies allegations by Virgin that it is demanding "more than double" the amount currently paid.

Q: So, what does this means for cable TV viewers?

This has impacted on the 3.3 million subscribers who get cable television from Virgin Media - formerly known as NTL:Telewest.

HAVE YOUR SAY
I hope the loss of Sky channels will be translated into a reduction in price for the consumer
Rob Martin, Cardiff

Big shows no longer available include new episodes of Lost, 24 and The Simpsons which all get their premiere on Sky One, part of the Sky Basics TV package.

In full, the channels lost are Sky One, Sky Travel, Sky News and Sky Sports News.

Premium channels such as Sky Sports and Sky Movies have not been affected.

Q: So Virgin Media customers are be worse off?

Yes. Virgin Media says it has no plans to cut its prices to compensate for the loss of the channels - saying it still offers good value, and citing around 2,700 hours of on-demand viewing.

Q: What does Sky want?

It was asking for a "reasonable price" that "reflects the benefits" it gives to Virgin Media customers.

As well as the existing channels, it says it is offering new high definition (HD) services.

Q: What does Sky stand to lose?

If it is not getting many of its key channels to Virgin Media's subscribers then its potential audience is much smaller, making the channels less appealing to advertisers.

Sir Richard Branson, leading Virgin Media shareholder
The claws have come out in Virgin Media's battle with BSkyB

Virgin has estimated this could cost Sky as much as 45m in lost advertising revenue.

Sky itself put the figure at around 20m.

However some analysts have argued that by bundling Sky One, Sky News and Sky Sports News into a pay-to-view package, BSkyB is creating something worth more than it could make from advertising.

Q: Is there hope of the situation being reversed and the channels being made available?

While both sides would gain, it all comes down to money.

Virgin Media says it does want the channels, and that they are "worth something" but that it would not pay the price being demanded.

Sky, meanwhile, indicated it was not prepared to negotiate further on price.

The row has turned increasingly bitter.

When Virgin Media's chief executive 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.

Q: Is this the first spat between the two companies?

While this is the first highly public squabble since NTL: Telewest rebranded as Virgin Media, the two companies have clashed before.

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 NTL, as it was then known, had declared an interest in buying it.

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

They are also bitter rivals in markets other than television.

Virgin's "quadplay" offer - encompassing TV, fixed phone lines, mobiles phones and the internet - is going head-to-head with Sky's "See, Speak, Surf".

Q: Does this impact on Freeview viewers?

This specific row has no impact on the seven million viewers who currently access Sky's basic channels through Freeview.

But Sky said last month it planned to withdraw its channels from Freeview viewers - offering them instead on a terrestrial pay-TV service.


SEE ALSO
Virgin slams BSkyB in TV dispute
23 Feb 07 |  Business
NTL renames itself Virgin Media
08 Feb 07 |  Business
Broadband costs dent BSkyB profit
31 Jan 07 |  Business
OFT starts formal BSkyB-ITV probe
12 Jan 07 |  Business
NTL ends takeover interest in ITV
06 Dec 06 |  Business
Branson challenges BSkyB over ITV
19 Nov 06 |  Business
NTL launches quadruple-play deal
27 Sep 06 |  Business

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