The movement between Virgin Media and BSkyB over access to channels cannot yet be called a coalition, but it’s close, writes Julian Clover.
It is a curious world when one moment an operator is complaining about market abuse brought about because of the premium content held by a rival and the next moment is selling the same company their own channels business. The icing on the cake is that the next day they then returned to the courts to start arguing again.
This is the new normal between BSkyB and Virgin Media and for both companies this marks something of an improvement in relations following on from the nadir that was the 18 months when Virgin customers were deprived of Sky’s basic channels, and Sky of the additional advertising revenues and carriage fees that they brought.
Virgin has made clear that it isn’t going to be pushed around. Sky is not the only company that the cableco has been prepared to square up to. Remember the Gemstar patent dispute, amongst other things about the bricks in the wall EPG format, which Virgin successfully challenged in the High Court. Parallels could be drawn with that of Sir Richard Branson’s various disputes with the UK’s incumbent airline British Airways. It is curious to describe BSkyB as an incumbent, but having effectively written the pay-TV rulebook that is exactly what it is.
The bouquet of channel brands purchased by Sky from Virgin can trace their roots back to the days of United Artists Programming. Bravo was once a cable only channel that would show a curious mix of old fashioned television, but has now morphed into something decidedly more laddish. It was a time when the old cable franchises would show local television, a prospect that has again surfaced this week through Jeremy Hunt, the new Secretary of State for Culture, Olympics, Media and Sport, without recourse to the litany of failed business plans.
It will be several months until, regulators permitting, Sky is able to further strengthen its programming hand. In that time it will no doubt assess whether or not all the brands will survive, Virgin 1 it has been agreed will at least lose its name, and I might venture that the channel itself is unlikely to survive. The most valuable asset of the former FTN will be its slot on Freeview, which Sky could arguably bring into its Picnic pay-TV project, using DVB-T2/MPEG-4 to squeeze more value out of the bandwidth.
On its own programming grid there are also some valuable slots that could be reshuffled once the cards have been dealt.
For UK cable this is just about the last hurrah for the programming business. The sale of part of the Chellomedia business to CBS could be viewed with the same light, but in Spain the Liberty Global programming arm has made acquisitions, even if coming from another cable operator.
A few years back the tagline at the Cable Congress was That’s Entertainment and it probably was.