British Sky Broadcasting (BSkyB) and Virgin have reached a mutual agreement thus ending their long-standing clash over distribution of channels.
In a deal finalised between the two entities, BSkyB would acquiring the business of Virgin Media Television (VMtv) for a total consideration of up to 160 million pounds to Virgin Media.
The acquisition of VMtv includes the LIVING, LIVINGit, Challenge, Challenge Jackpot, Bravo, Bravo 2 and Virgin1.
Jeremy Darroch, CEO, BSkyB, commented, “VMtv is an attractive investment opportunity which complements our existing content business and delivers strategic and financial benefits. We are pleased that, through commercial negotiation, we have been able to ensure wide distribution of our channels to a growing pay TV universe.”
Alongside the acquisition of the VMtv, the terms of the deal also eliminates the carriage fees paid by both to each other for their individual channels on the other’s TV services.
With this deal, Sky expands the reach of its high-definition channels, where 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.
Besides the new carriage agreements will also 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.
As for Virgin Media the sale will result in substantial value for the Company. Neil Berkett, CEO, Virgin Media, remarked over the deal, “The sale of our channels business has generated substantial value. Together with the new commercial agreements we’ve announced today, it will allow us to focus more closely on our strategy of exploiting Virgin Media’s super-fast connectivity to offer our customers a range of the very best content through a highly versatile next generation entertainment application.”
Sky will assume responsibility for selling advertising for the newly acquired VMtv channels from January 2011. Sky also mentioned that it would not use the Virgin brand name and rebrand the Virgin1 channel soon.
Completion of the agreements is conditional on obtaining merger control clearance in the Republic of Ireland.