[Note from the Content Editor: Shortly after the publication of this article, we were contacted by a spokesperson from Virgin Media who provided further details on the situation. In addition, a number of financial analysts have since published their interpretations of Virgin Media’s financial position. Subsequently, we have amended the article's title to reflect this clarification.]
British cable and communication company Virgin Media has dropped the price of its signature Sit-Up shopping channels after the company failed to obtain the contract for the renewal of its Freeview capacity last year.
The Virgin Media Board, which notified that it gained as many as 14,800 customers during the last quarter of 2008, is expected to meet this weekend to decide whether to auction its television channels business, which include 50 percent stake in the BBC and the UKTV joint venture.
Analysts estimate that the Virgin Media Television (VMTV), which has some of the popular channels like ‘Living’, could raise anything between £420 million and £500 million.
However, the analysts further asserted that the sale of VMTV somewhat depend upon the outcome of the ongoing debate over the Channel 4’s future, in addition to the planned joint venture with the BBC Worldwide, commercial division of the BBC.
Virgin’s complete suit of content business registered revenues worth £118.8 million for the quarter that ended on December last year, showing a rise from £114.1 million as reported a year ago.
Besides, Virgin Media’s Sit-UP business suffered heavily when the company had to close down broadcasting on one of its Freeview channels after it failed to achieve the contract for renewal of the channel’s license.
Slashed value of the Sit-Up channels has pushed company into the red zone with a cumulative operating loss of £50.2 million last quarter, as against the £17.8 million loss reported a year ago, with its net loss for the quarter was £241.4m, as compared to the £163.2m registered for the same period a year back.
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The financial problems Virgin Media is currently facing act as a stark reminder that even if its broadband arm is still capturing new customers, the cable company is not out of the woods yet. Virgin Media has huge debts that will become costlier to service over time and it needs to act well before it is too late.
(Broadband TV News)
(Rapid TV News)