Virgin Media Inc. is a company which provides fixed and mobiletelephone, television and broadband internet services to businesses and consumers in the United Kingdom. Its executive office is in New York City, United States and its operational headquarters are in Hook, United Kingdom.[2]
The company was formed in March 2006 by the merger of NTL and Telewest, which created NTL:Telewest. A further merger with Virgin Mobile UK in July 2006 created the first "quadruple-play" media company in the United Kingdom, offering television, internet, mobile phone and fixed-line telephone services. All of the company's consumer services were rebranded under the Virgin Media name in February 2007.[3]
Virgin Media owns and operates its own fibre-opticcable network, the only national cable network in the United Kingdom. As of 31 December 2011 it had a total of approximately 4.8 million cable customers, of whom around 3.76 million were supplied with its television services (Virgin TV), around 4 million with broadband internet services and around 4.2 million with fixed-line telephony services.[1] At the same date it had around 3 million mobile telephony customers.[1] Virgin Media competes primarily with BSkyB, BT Group, EE, O2, TalkTalk and Vodafone.[1]
Telewest originated in Croydon in 1984 under the name "Croydon Cable".[4] In 1988 United Cable of Denver, US, acquired Croydon Cable. Franchises extended the company scope in Edinburgh and the south-west and south-east of England. In 1989 United Cable merged with United Artists Cable International. In 1991 United Artists merged with their largest shareholder TCI (now Liberty Media), to form the largest cable operator in the US. TCI and US West announced a joint venture, and in 1992 the joint venture company became Telewest Communications. In 1995 Telewest merged with SBC Communications, adding franchises in the Midlands and North West serving 1.3 million homes.[5]
Telewest merged with General Cable in 1998,[6] and acquired an outstanding interest in Birmingham Cable, adding a further 1.7 million franchise homes in Yorkshire, west London and Birmingham.[7] Telewest purchased the remaining 50% stake in Cable London, one of the UK's first cable TV companies founded by Stephen Kirk, Jerrold Nathan, Andrew Karney and Malcolm Gee, from NTL in 1999, adding 0.4 million franchise homes in north London.[8] In April 2000 Telewest merged with Flextech,[9] and in November extended its cable network with the acquisition of Eurobell, taking the total number of homes passed to 4.9 million.[10] The company later became known as "Telewest Broadband" in a re-brand during 2001.[11]
In subsequent years Telewest experienced many financial problems due to huge debts incurred as a result of constructing its cable network and of acquiring other cable companies and assets. In 2004 Telewest restructured itself by swapping its unsecured debt for 98.5% of its shares.[12] The London Stock Exchange then de-listed the consolidated shares. Major Telewest shareholders included Huff[disambiguation needed] and Liberty Media (run by cable tycoon John Malone). Afterwards the company emerged from financial restructuring and completed a merger with NTL in 2006.[13]
Barclay Knapp and George Blumenthal, the founders of the cellular network company Cellular Communications, Inc., established International CableTel in 1993.[4] They founded CableTel in order to take advantage of the deregulation of the UK cable market. Initially, Cabletel acquired local cable franchises covering Guildford, Northern Ireland and parts of Central Scotland and South Wales. In 1996 CableTel acquired National Transcommunications Limited (NTL), the privatised UK Independent Broadcasting Authority transmission network.[14] In 1998 CableTel adopted "NTL" as its new name.
The company invested heavily in an expansion of its network and on acquisitions – including Cambridge Cable and the consumer cable division of Cable and Wireless, bought for $10bn, and partly paid for with a $5.5bn investment from France Telecom.[15] NTL also began to expand outside the UK in 1999, buying into markets on continental Europe and in Ireland.
NTL struggled with a collapse of the telecommunications markets from mid-2000, coupled with the rapid acquisition of local cable operators and significant customer service problems. It then had to contend with the setting up in November 2002 of one of the UK's first consumer lobby groups, nthellworld, with ntl:hell following shortly after.[16]
NTL sought Chapter 11 bankruptcy protection in May 2002 in order to organise a refinancing deal.[17] The company did not emerge from protection until January 2003, having converted around $11 billion of debt into shares. At the time, this amounted to the largest debt default in US corporate history. The company reduced its debt to $6.4bn. A reorganisation split NTL itself into NTL Inc. (covering the UK and Irish markets) and NTL Europe Inc. (for the French, Swiss and German parts of the corporation).[18] New executives replaced the NTL president, CEO and co-founder Barclay Knapp, as well as Stephen A. Carter, the MD and COO.[19]
After exiting Chapter 11 protection, NTL produced an operating profit. In 2004 it announced plans to split its broadcasting division off from the main company. In December 2004 NTL sold its broadcast unit to a consortium led by Macquarie Communications Infrastructure Group (MCG) for £1.27 billion.[20] (Macquarie renamed the division Arqiva in May 2005.) This sale allowed NTL to focus on its "core businesses" of providing communications packages and cable services.
By 2005 NTL's UK network consisted of a 7,800 km fibrebackbone with the potential to reach 8.4 million residential homes and around 610,000 businesses. In January of that year, NTL started rolling out Video On Demand. With content selected by NTL, the service covered genres including music videos, children's programming and adult entertainment, providing an extension to the basic "pay per view" services the company offered for film and sport content. The new service allowed customers to rewind, fast-forward and pause content.[21]
It sold a range of ADSL broadband packages through BT landlines to those living outside areas served by NTL's cable television network. Virgin.net broadband customers could receive up to 8 Mbit/s downstream and 400 kbit/s upstream, with usage allowances depending on which package the user took. Virgin.net also offered bundled phone services via Carrier Preselect (CPS) to broadband subscribers. The service offered various usage allowances depending on which package a user took. Virgin.net also offered subscription-based and subscription-free dial-up Internet access. Prior to acquiring Virgin.net, NTL offered a similar package called NTL Freedom.
On 8 February 2007, the services provided by Virgin.net became integrated into the new Virgin Media brand as Virgin Media Beyond Cable. It was renamed as Virgin Media National in November 2008. NTL Freedom was merged into the new entity in January 2009.
Merger of NTL and Telewest
From late 2003 discussions commenced on a merger between Telewest and NTL. Thanks to their geographically distinct areas, NTL and Telewest had co-operated previously, as in redirecting potential customers living outside their respective areas. On 3 October 2005, NTL announced a USD$6 billion purchase of Telewest, to form one of the largest media companies in the UK. The merger agreement as structured would have left NTL having to negotiate with BBC Worldwide (the BBC's commercial arm) due to a change-of-ownership clause written into the agreement for UKTV, a joint venture with Telewest's Flextech content division. To prevent this, Telewest instead acquired NTL.
The parties completed the merger on 3 March 2006, making the merged company the UK's largest cable provider, with more than 90% of the market. Once merged, the combined company renamed itself to NTL Incorporated, with ex-NTL shareholders controlling 75% of the stock and ex-Telewest shareholders 25%. Nine of the eleven directors of the new board came from NTL and two from Telewest.[23]
Merger with Virgin Mobile
In December 2005 NTL:Telewest and Virgin Mobile UK announced that talks had taken place regarding a merger.[24][25]
Virgin Mobile's independent directors rejected the original bid of £817 million ($1.4 billion), taking the view that NTL's bid "undervalued the business". Sir Richard Branson reportedly expressed confidence that a restructured deal could go ahead, and in January 2006 NTL increased its offer to £961 m (372p per share). On 4 April 2006, NTL announced a £962.4 m recommended offer for Virgin Mobile.[26] According to reports, Branson accepted a mix of shares and cash, making him a 10.7% shareholder of the combined company.
The takeover completed on 4 July 2006, creating the UK's first 'quadruple play' media company, bringing together television, broadband, mobile phone and fixed-line phone services. The deal included a 30-year exclusive branding agreement that saw NTL adopt the "Virgin" name after it completed its merger with Telewest. NTL:Telewest announced on 8 November 2006 it would change its name to "Virgin Media Inc".[27]
2006 ITV merger proposal
On 9 November 2006, NTL announced it had approached the commercial television broadcaster ITV plc about a proposed merger,[28] after a similar announcement by ITV.[29] BSkyB effectively blocked the merger on 17 November 2006 by controversially buying a 17.9% stake in ITV plc,[30] a move that attracted anger from NTL shareholder Richard Branson,[31] and an investigation from media and telecoms regulator Ofcom.[32] On 6 December 2006 NTL announced that it had complained to the Office of Fair Trading about BSkyB's move, and would withdraw its attempt to buy ITV plc, stating it did not believe it could currently make a deal on favourable terms.[33]
NTL Group's services – previously marketed under the NTL, Telewest and Virgin.net brands were merged with Virgin Mobile under the "Virgin Media" brand on 8 February 2007, referred to by Virgin as V Day.[34]
In February 2007, Virgin Central, an on-demand service, gained the rights to begin showing episodes of the television show Lost (already shown on Sky1), and other shows including Alias and The OC. This service extended the on-demand service previously known as Teleport TV. Teleport TV was renamed TV Choice offering recently broadcast shows and other shows and series.[35]
A channel agreement for Virgin Media to keep non-premium Sky channels ended at midnight on 1 March 2007. Virgin Media and Sky failed to reach agreement on the issue, and Sky reacted by posting a letter to the public in major UK newspapers on 28 February 2007.[citation needed] Despite Sky's letter, Virgin Media blamed Sky for tyrannising them and inciting consumers to switch. The companies failed to resolve their differences, and subsequently after midnight on 1 March 2007, Virgin Media replaced the Sky1, Sky2, Sky Travel, Sky Travel Extra, Sky Sports News and Sky News channel content with a standard message. Sky attributed part of the rate rise to the fact that the new deal would also include Sky3, Sky Arts and undisclosed high definition and video on demand content. Sky said the deal would cost only 3p per customer per day (roughly £35,000,000 per year), but Virgin said that a minimum payment guarantee included in the contract meant that the actual amount due would exceed twice the current payment.[36]
On 2 March 2007 the National Consumer Council accused Sky and Virgin of "behaving like children" and stated that at the end of March 2007 it would consider whether or not to raise a super-complaint against them "that will help to knock heads together".[37] Then on 5 March 2007 Virgin Media threatened to take legal action against BSkyB if the matter remained unresolved in 30 days.[38] On 12 April 2007 Virgin Media filed a legal case in the High Court against BSkyB under the UK Competition Act 1998 and Article 82 of the EC Treaty. BSkyB claimed that Virgin Media made little effort to further arbitration.[39]
On 1 July 2007 it emerged that the private equity investment firm The Carlyle Group had initiated discussions to acquire Virgin Media Inc.[40][41]
And then on 20 July 2007 an announcement appeared to the effect that Virgin had struck a deal with Setanta Sports to offer six Setanta channels free of charge to XL- package customers, including 46 live Premier League football matches, 60 live Scottish Premier League games and US PGA Tour golf.[42]
On 9 May 2008 it was reported that Virgin Media and Sky had held talks to resolve the dispute.[43]
On 4 November 2008 it was announced that an agreement had been struck for Sky's Basic channels – including Sky1, Sky2, Sky3, Sky News, Sky Sports News, Sky Arts 1, Sky Arts 2, Sky Real Lives and Sky Real Lives 2 to return to Virgin Media from 13 November 2008 until 12 June 2011. In exchange Sky will be provided continued carriage of Virgin Media Television's channels – Living, Livingit, Bravo, Bravo +1, Challenge, Challenge Jackpot and Virgin1 for the same period.[44] The agreements include fixed annual carriage fees of £30m for the channels with both channel suppliers able to secure additional capped payments if their channels meet certain performance-related targets. As part of the agreements, both Sky and Virgin Media have agreed to terminate all High Court proceedings against each other relating to the carriage of their respective basic channels.[45]
On 26 August 2009 the Advertising Standards Authority upheld claims made by Virgin Media in its marketing, despite a complaint from rival broadband provider Sky."[46]
Acquisition by Liberty Global
On 5 February 2013, Liberty Global announced that they had agreed to buy Virgin Media for approximately US$23.3 billion (£15 billion) in a stock and cash merger.[47] The deal is subject to majority approval from both companies’ shareholders and regulatory approvals and is expected to close in the second quarter of 2013. Virgin Media will continue to operate under its own brand.[48]
Current operations
Virgin Media shop on Commercial Street in Leeds, West Yorkshire
Virgin Broadband
The broadband division combines NTL's cable-broadband operations (broadband Internet access connections through cable), Blueyonder (Telewest's cable-broadband operations) and Virgin.net (ADSL, broadband Internet access through a non-cable telephone line).
Virgin Broadband in cabled areas is marketed as "fibre optic broadband". It is a FTTN network, where fibre optic trunk lines are used to connect the area's headend to cabinets on the street.[citation needed] It is not a fibre to the home service like Verizon FiOS; instead, the link between the cabinet and the customer uses DOCSIS 3.0 over coaxial copper cable.
In July 2009 and 2010, Virgin Media Broadband came first in an Ofcom broadband speed test in the UK.[49][50] Ofcom tested typical speeds of broadband services provided by most ISPs in the UK, including BSkyB, BT, Tiscali, AOL, TalkTalk, Plusnet, O2 and Orange. Since most broadband connections in the UK are provided by ADSL, and the quality of individual phone lines varies according to distance from exchange,[51] most landline broadband services are marketed as being the maximum speed that the individual's phone line will support, "up to 8mb". As a result, actual speeds obtained vary greatly, but are always constrained by the individual phone line - the quality of which is out of the control of the broadband provider. Cable broadband has no such speed variability caused by connection quality as the network is fully owned and controlled by the cable company providing the broadband - any slowdowns are wholly as a result of traffic shaping, or local capacity being over-sold or over-subscribed. For this reason, the results showed that Virgin Media's broadband speed was closer to (although still not 100% of) the "up to" figures it advertised, compared to the other providers tested. While landline broadband providers offered rates of "up to" 24 Mbit/s, the launch of a Virgin's 50 Mbit/s service on 15 December 2008 was advertised as "the UK's Fastest Broadband."[52]
On 8 October 2009, Virgin Media began trials to deliver its TV and broadband services at up to 50 Mbit/s downstream via a VDSL2 line to a roadside cabinet. The cabinets were linked to Virgin Media backhaul via new fibre laid by Vtesse Networks through BT's local exchange, 5 km away.[53][54] As well as broadband, Virgin Media offered its full range of TV services, including high definition and on demand, over the new infrastructure.
On 11 March 2010, Virgin Media announced a six-month trial using telegraph poles to deliver 50 Mbit/s broadband and TV services to the Berkshire village of Woolhampton.[55] Virgin Media identified more than one million homes in parts of the UK that stand to benefit from deployment over telegraph poles, without the need for government subsidy. During July the trial was extended to existing commercial infrastructure in the Welsh village of Crumlin, Caerphilly.[56]
On 7 October 2010, Ofcom ordered BT to open up its fibre-optic network to competing broadband providers to help drive forward the rollout of high-speed internet services in the UK.[57] Ofcom further ordered BT to free up access to network infrastructure - including all telegraph poles and underground ducts - for the rollout of broadband to areas BT does not plan to reach. Virgin Media confirmed plans to expand its broadband network in the UK by using the infrastructure owned by BT.[58] By using the approach, the company hoped to expand its network to reach as many as 16 million of the UK's 26m homes.
On 27 October 2010, Virgin Media announced its 100 Mbit/s downstream broadband service, featuring 10 Mbit/s upstream rates, which went on sale on 8 December 2010.[59] Early service areas were parts of London, the South East and Yorkshire.[60] With the faster upstream rates specifically, it expects the uptake in cloud computing services will also see an increase. The roll-out was expected to be complete by mid-2012.[60]
On 11 January 2012, Virgin Media announced plans to double the speeds of selected broadband packages; their 10 Mbit/s package will increase to 20 Mbit/s, 20 Mbit/s and 30 Mbit/s to 60 Mbit/s, 50 Mbit/s to 100 Mbit/s, and its 100 Mbit/s package to 120 Mbit/s.[61] The roll-out is expected to begin in February 2012 and be completed by mid-2013, at a cost of £110m. Since the announcement, Virgin Media has confirmed that it now plans to also upgrade 50Mbit/s customers to 120Mbit/s at no extra cost, effectively cutting the monthly fee for existing 100Mbit/s customers.[62]
Packages
The 2012 services offered to cabled areas are:[63]
The L package includes a Virgin Media Hub (cable modem with integrated 802.11nwireless router). The XL, XXL and 100 packages include a Virgin Media Super Hub (DOCSIS 3 cable modem with integrated 802.11n wireless router). Equipment remains property of Virgin Media. In early 2012, a programme of speed doubling began, which will take until mid-2013 to complete. See the above table for the proposed upgrades.
Bandwidth throttling
Virgin Broadband employs a form of bandwidth throttling whereby customer bandwidth is reduced temporarily after a threshold is reached during peak periods. The company has experimented with and revised all parameters involved in the throttling, such as threshold size, peak period definitions, throttling percentage and duration. Separate thresholds are applied to upstream and downstream, and thresholds vary between packages. The XXL 'Unlimited' package is not throttled on the downstream, but is throttled on the upstream.
Example of throttling in action (based on May 2009 scheme): Customer has an L (10 Mbit/s) package, which has a 3GB threshold during 10 am-3pm and a 1.5 GB threshold between 4 pm-9pm with a 75% throttle for five hours. Customer downloads over 3GB on Tuesday morning between 10 am-3pm. The customer is then throttled to 2.5 Mbit/s for the next five hours from the time that they exceed the threshold, after which normal service is resumed.[64]
Usenet servers
Virgin Media hosts several operational Usenet servers (NNTP) “news.virginmedia.com”. Virgin media also hosts another operational Usenet server previously known as "text.news.ntlworld.com", now "text.news.virginmedia.com", which again has certain restrictions and limits article size to 50kb.
Crackdown on illegal filesharing of copyrighted material
On 2 April 2008, The Daily Telegraph reported that Virgin Media would be starting a trial to take action against subscribers who are illegally downloading copyrighted material from internet Peer-to-peer (P2P) services. Information of offenders would be provided by the British Phonographic Industry, and then Virgin Media and the BPI sends a warning letter to the customer.[65][66]
Virgin Media and the BPI denied reports of any agreement or pilot scheme and said they were only in talks on the matter.[67] However, at least one person claimed to have received a letter threatening disconnection.[68] Although the UK government backed plans to ban p2p users from the internet, it may soon be overturned by strong condemnation from the European Parliament on the grounds of privacy issues and the importance of internet access.[69]
In July 2008, the BBC reported that 800 Virgin Media customers who the BPI claim are sharing copyrighted files were sent warning letters in envelopes marked "If you don't read this, your broadband connection could be disconnected". At least one recipient of the letter denied any wrongdoing by any authorised user of his broadband connection.[70]
On 26 November 2009, it was revealed that Virgin Media would trial deep packet inspection technology to measure the level of illegal filesharing on its network.[71] The CView system, provided by Detica, will look at traffic and identify the peer-to-peer packets. It will then peer inside those packets and try to determine what is licensed and what is unlicensed, based on data provided by the record industry. The trial - which has no scheduled end date - will cover about 40 per cent of Virgin Media's network but those involved will not be informed. Virgin Media emphasised that it is seeking to measure the overall level of illegal filesharing, not to keep records on individual customers. Data on the level of copyright infringement will be aggregated and anonymised.
On 22 January 2010, the European Commission confirmed that although Virgin Media had not contacted them, it would "closely monitor" the trial.[72] While Privacy International announced that it would press a criminal complaint with the Metropolitan Police Service, because they argue that Under the Privacy and Electronic Communications (EC Directive) Regulations (PECR) and the Regulation of Investigatory Powers Act (RIPA) as well as the European ePrivacy Directive, that interception and processing of communications requires either explicit informed consent from all parties or a warrant.
On 3 May 2012, it was reported that Virgin Media had become the first ISP in the UK to implement a web filter to block access to The Pirate Bay, in compliance with a UK High Court order in April,[73] although given there continue to be a great number of mirrors, proxies, or VPNs, this has proved unsuccessful.[74]
London Underground
In March 2012 Virgin Media won an exclusive contract to provide Wi-Fi access to London Underground platforms until 2017.[75] The company will offer commuters mobile internet at 80 stations by July 2012 and a further 40 stations by the end of 2012.[76] The service, which will give access to mobile internet via a TfL portal offering travel, news and entertainment bulletins, will remain free for Virgin Media customers after the 2012 Summer Olympics. Other users will only be able to access a limited amount of free content on the TfL portal, with full mobile internet services offered on a pay-as-you-go basis.
Virgin Media Business
On 11 February 2010, Virgin Media announced that its business division would be rebranded as Virgin Media Business with immediate effect. The company, which had been operating as ntl:Telewest Business, is now the largest B2B brand in the Virgin Group. This marked the end of the NTL and Telewest brand being used by the company.[77]
In September 2010, Virgin Media Business launched Big Red Internet, the first dedicated business internet service, without constraints or extra charges.[78]
During November 2010, Virgin Media Business became the first telecommunications provider in the world to re-certify its Ethernet portfolio under MEF (Metro Ethernet Forum) 9 and 14 service validation structure.[79]
Later that month, Virgin Media Business committed its support and super-fast, nationwide fibre-optic network to the UK Government to underpin the Public Services Network, the Cabinet Office programme designed to deliver substantial cost savings through a ‘network of networks’ for public sector organisations.[80]
In January 2011, London Grid for Learning (LGfL) selected Virgin Media Business to power a £200 million framework agreement to transform the delivery of public services in and around London.[81]
In February 2011, Virgin Media Business launched a new proposition offering data centres access to carrier grade connectivity.[82]
After undergoing a successful security audit and rigorous testing across the entire Virgin Media network, in accordance with the new NGN 2-2-4 security standards, Virgin Media Business was awarded the UK’s first interim Public Services Network security accreditation in April 2011. The accreditation meant that Virgin Media Business was the first organisation allowed to operate as a Direct Network Service Provider (DNSP) and a Government Conveyance Network Service Provider (GCNSP). Full accreditation was awarded in July 2011.[83]
During May 2011, Virgin Media Business partnered with data centre provider, ICM, to launch a Colocation service. The service offers businesses access to 11 data centres across the UK.[84]
June 2011 saw Virgin Media Business and Westminster City Council launch a new £190 million pan-London IT framework. The Next Generation Network resource will act as a “one stop shop” for procurement to allow public sector organisations across the capital to buy phone, data and video technology, as well as CCTV and Wi-Fi at competitive prices.[85]
In July 2011, Virgin Media Business was awarded one of three places on the Government Procurement Service Managed Telecommunications Convergence Framework (MTCF). The new framework will act as a resource for public sector organisations to buy Public Services Network compliant technologies, and is the first such framework in the UK.[86]
In September 2011, Virgin Media Business signed a deal with Mobile Broadband Network Ltd to provide the UK’s first synchronous Ethernet mobile backhaul network – expanding the bandwidth available to Hutchinson 3G UK and EE for their 3G and 4G network requirements with 1Gigabit per second connectivity.[87]
In September 2011, the division announced that it had partnered with Savvis to launch its first true cloud product, the Virtual Private Data Centre (VPDC).[88]
Virgin Media Business is the UK’s only telco with a nationwide fibre optic Next Generation Network. Organisations working with Virgin Media Business include London City Airport, Arqiva, Hampshire and Isle of Wight Partnership and South West Water.[89]
Virgin Mobile
The headquarters of Virgin Mobile in Trowbridge, Wiltshire.
Virgin Media owns Virgin Mobile Telecoms Limited, a UK-based Mobile Virtual Network Operator (MVNO) with contracts to use EE's carrier network, with over four million subscribers.[90]
Virgin Phone
Virgin Phone offers landline telephone services; it ranks as the number two service behind the former UK state monopoly, BT Group.[91]
On 1 April 2010, Virgin Media began to offer free home phone to mobile calls.[92] Virgin Phone customers are able to call Virgin Mobile customers at no charge, within the Talk Plan specified periods.
Virgin TV, the digital cable television service from Virgin Media, currently ranks as the UK's second largest pay TV service, having 3.6m subscribers, compared to BSkyB's 8.2m as of Q3 2007.[93]
Currently 55% of UK households potentially have access to Virgin's network,[94] while anyone in the UK with a line-of-sight view of the Astra & Eurobird satellites at 28.2° east has the ability to receive Sky's service.
Virgin TV ranks as the UK's largest provider of on-demand content, with over 3 million Video on Demand (VoD) customers and as of October 2011 over 6,500 hours of programming.[95]
Virgin Media Television, the former content subsidiary of Virgin Media (formerly called Flextech), operated a number of wholly owned channels including Bravo, LIVING, Trouble and Challenge.
In June 2007 Virgin announced plans to launch a new television channel on Freeview and cable, replacing Ftn on Freeview. The new channel, "Virgin1" and "Virgin1+1", launched on 1 October 2007 and broadcasts a mix of British and American programming.[96][97]
On 4 June 2010, BSkyB and Virgin Media announced that they had reached an agreement for the acquisition of Virgin Media Television by BSkyB.[98][99] The companies have, in parallel, agreed to enter into a number of agreements providing for the carriage of certain Sky standard and high-definition (HD) channels. Sky acquired VMtv for a total consideration of up to £160 million in cash, with £105 million paid on completion and the remainder paid following the regulatory process. The acquisition expanded Sky's portfolio of basic pay TV channels and eliminated the carriage fees it previously paid for distributing VMtv channels on its TV services. New carriage agreements will secure wholesale distribution of Sky's basic channel line-up, including Sky1 and Sky Arts, and the newly acquired VMtv channels, on Virgin Media's cable TV service. For an incremental wholesale fee, Virgin Media will, for the first time, have the option of carrying any of Sky's basic HD channels, Sky Sports HD 1 and Sky Sports HD 2, and all Sky Movies HD channels. Virgin Media will make available through its on-demand TV service a range of content from Sky's basic and premium channels, including the newly acquired VMtv channels. Virgin Media will also have access to red button interactive sports coverage and the opportunity to deliver selected standard definition programming over the internet. Sky will assume responsibility for selling advertising for the newly acquired VMtv channels from January 2011. Completion of the agreements was conditional on obtaining merger control clearance in Ireland.
Virgin1 was also a part of the deal but was rebranded as Channel One on 3 September 2010, as the Virgin name was not licensed to Sky.[100][101] The new carriage deals are understood to be for up to nine years.[102] Previously the carriage deals tended to be struck every three years.
On 29 June 2010, the Irish Competition Authority cleared the proposed transaction.[103] The parties proceeded after the Minister for Enterprise, Trade and Innovation did not direct the Authority to carry out a full investigation within 10 days of the date of the Authority’s decision.
On 13 July 2010, BSkyB and Virgin Media announced the completion of Sky's acquisition of Virgin Media Television (VMtv) following regulatory approval in Ireland.[104] VMtv was then renamed the Living TV Group. In completing the acquisition, Sky paid Virgin Media an initial £105 million with up to an additional £55 million to be paid upon UK regulatory clearance.
On 20 July 2010, the Office of Fair Trading (OFT) announced they would review BSkyB's acquisition of Virgin Media Television to judge whether it posed any competition concerns in the UK.[105] The OFT planned to investigate the deal to see whether it could constitute a qualifying merger under the Enterprise Act 2002. The watchdog invited interested parties from the industry to comment on the sale, including its potential impact on the pay-TV market. On 14 September 2010, The OFT decided not to refer BSkyB's takeover of Virgin Media's TV channels to the Competition Commission.[106]
Virgin Media owned Sit-up Ltd until 1 April 2009 - this followed partial ownership prior to May 2005. Sit-up is a UK based broadcaster which launched in 2000. Sit-up runs the channels Bid TV, Price Drop TV and Speed Auction TV each day from 7:45 am through to 1:30 am. The downtime is covered by their rolling advertisement arm, Screenshop. The channels are designed to sell consumer products via digital TV (currently carried by digital satellite, cable, and terrestrial) or the internet. On 1 April 2009 it was announced that Sit-up Ltd had been sold by Virgin Media to Aurelius AG. The purchase price or terms of the agreement have not been disclosed.[107]
UKTV is a digital cable and satellite television network, formed through a joint venture between BBC Worldwide, a commercial subsidiary of the BBC, and Virgin Media. It is one of the United Kingdom's largest television companies.[108] UKTV's channels are available via satellite and cable in the UK and Ireland. In the UK, on digital terrestrial television, Yesterday and Dave are available on the Freeview platform, and selected parts of Gold, Home and Good Food are available through Top Up TV. Watch is currently the flagship channel operated by the network. It is a general entertainment channel from UKTV that launched on 7 October 2008.
On 15 August 2011, Virgin Media agreed to sell its 50% stake in UKTV to Scripps Networks Interactive in a deal worth £339m. Scripps paid £239m in cash, and about £100m to acquire the outstanding preferred stock and debt owed by UKTV to Virgin Media.[109] Completion of the transaction was contingent on regulatory approvals in Ireland and Jersey, which was received on 3 October 2011.[110] Related to the transaction, Scripps Networks Interactive and BBC Worldwide are negotiating an agreement whereby, after completion, BBC Worldwide would have the option, via a combination of cash and a package of digital rights for UKTV, to increase its shareholding from 50 percent to a maximum of 60 percent. Scripps Networks Interactive’s existing voting rights and Board representation would be unaffected by this proposed arrangement, which would be subject to BBC Executive and BBC Trust approvals.
Channels
Virgin TV carries around 300 digital television and radio channels, including a mixture of subscription, premium subscription and pay-per-view channels.
Corporate affairs
Relationship with Virgin Group
Virgin Media have entered into a 30-year licensing agreement with Sir Richard Branson's Virgin Group Limited to licence out all the relevant Virgin sub-brands for a term of 30 years, with a ten-year opt-out clause, Branson accepted a mix of shares and cash, making him a 10.7% shareholder of the combined company at the time.[111]
In July 2007, Virgin Group hedged 37pc of its stake in Virgin Media for $224m through a collared loan agreement with Credit Suisse, a transaction which enabled it to retain the voting and dividend rights. Virgin Group had the option of buying back the 12.8m Virgin Media shares it had mortgaged after two years, but in May 2009 decided against this. The funds were used at the time by Virgin Group to invest in other areas of its business, such as Virgin Green Fund, which was launched in September 2007, Virgin America and Virgin Mobile India.[112]
Sir Richard Branson's Virgin Entertainment Investment Holdings Limited owns a minority holding of 21,413,099 Virgin Media common stock as of December 2009,[113] making them the third largest shareholder.
On 11 November 2008 Virgin Media revealed plans to cut 2,200 jobs by 2012 - about 15% of its workforce - as part of a group-wide overhaul.[114]
Delaware holding company
Virgin Media's UK operations are ultimately controlled by a US Delaware organisation named Virgin Media (UK) Group Inc.[115]
Interested stakeholders cannot confirm who actually owns and controls Virgin Media due to Delaware company law not requiring disclosure of controlling ownership in annual reports made to the state.[116]
Advertising
Virgin Media launched in February 2007, with a public relations event and expensive advertising campaign covering major UK television channels, newspapers and billboards. Recent television advertising has featured actress Uma Thurman, comedienne Ruby Wax, actors Samuel L. Jackson, Marc Warren, and currently David Tennant. Virgin Media also sponsored the Channel 4 reality TV show Big Brother until the end of the ninth series.
In 2012, Virgin Media launched a multi-million ad campaign starring Usain Bolt and Virgin founder Richard Branson to promote its superfast broadband service. The TV adverts were directed by Seth Gordon and involve Usain Bolt impersonating Richard Branson.[117]
Market share
Broadband
As of 2011, Virgin Broadband has a 20.2% share of the broadband market, behind BT Total Broadband (on 29.3%) and just ahead of TalkTalk (on 18.5%).[118]
Television
Virgin Television has currently around 3.4 million subscribers.[119] 3.2 million of them are digital cable customers, and the other 200,000 are analogue cable customers.
Virgin makes up around 30% of the UK's TV distributors, with Freeview having the most, and Sky being second.[citation needed]
Controversies
Net neutrality
In April 2008 Acting CEO Neil Berkett sparked controversy when he told Television, a magazine published by the Royal Television Society, “this net neutrality thing is a load of bollocks.” According to the journalist, he claimed that any video content provider that refused to pay Virgin Media a premium for faster access would have to get stuck in “bus lanes,” having their content delivered to end users at much slower speeds than that of paying content providers.[120]
There has been widespread criticism of this policy expressed on the internet, large internet communities are requesting that Virgin customers end their subscription and initiate a mass boycott.[121]
According to Virgin Media, the comments in the article were taken out of context and misinterpreted.[122] A statement released by the company states: "With Virgin Media rolling out a 50Mb service later this year, we are uniquely equipped to cope with the demand for new bandwidth-hungry services. We strongly support the principle that the internet should remain a space that is open to all and we have not called for content providers to pay for distribution. However, we recognise that as more customers turn to the web for content, different providers will have different needs and priorities and in the long term, it's legitimate to question how this demand will be managed. We welcome an informed debate on this issue."
In early 2008 it was announced that the ISP arm of Virgin Media had entered into a contract (along with BT and TalkTalk) with the former spyware company Phorm (responsible under their 121Media guise for the Apropos rootkit)[123][124] to intercept and analyse their users' click-stream data, and sell the anonymised aggregate information as part of Phorm's OIX advertising service.[125][126] The practice, which has become known as "data pimping", came under intense fire from various internet communities and other interested parties who believe that the interception of data is illegal under UK law (RIPA).[127][128] At a more fundamental level, many have argued that the ISPs and Phorm have no right to sell a commodity (a user's data) to which they have no claim of ownership.
Though Phorm initially claimed Virgin Media had signed an exclusive contract and were committed to implementing Phorm's Webwise tracking system, Virgin Media have since distanced themselves from this and now state that they have only signed a preliminary contract with Phorm to better understand the tracking technology, and are under no obligation to implement it.[129] Reports on the Guardian website in May 2008 suggested Virgin Media may be further distancing themselves from the controversial system.[130]
In December 2008, Virgin Media was one of several ISPs in the UK to attempt to censor its users' access to the Wikipedia article about the 1976 album Virgin Killer by stadium rock band Scorpions.[131] The album cover has generated controversy, as it features the partially obscured image of a naked, underage girl. The Wikipedia article includes this image and its URL was blacklisted by the Internet Watch Foundation after a user complaint. The blacklisting has since been rescinded.
