Media Lifeline: Virgin Media
campaignlive.co.uk, Friday, 13 July 2007 12:00AM
Sir Richard Branson's turbulent road to quadruple play has taken a fresh turn in the guise of a confirmed bid.
1999: Virgin Mobile launches as a mobile virtual network operator - a customer-facing brand that actually uses the infrastructure of another operator, in this case T-Mobile. Virgin is already an internet service provider, having launched a free service, Virgin.net, in 1996. This is eventually sold to ntl in 2004.
March 2006: By the late 90s, the cable market had boiled down to two companies - ntl and Telewest, the latter of which had merged with Flextech. Then in 2006 comes the consolidation endgame, with the formation of ntl:Telewest.
July 2006: But that merger process has hardly begun bedding in when ntl:Telewest begins talks with Virgin Mobile. The eventual deal, worth £962 million, creates the UK's first quadruple-play media company - television services, broadband internet, mobile and fixed-line telephony. Sir Richard Branson becomes a 10.7 per cent shareholder in the new company, which has the rights to use Virgin branding for 30 years.
February 2007: But the company soon runs into controversy. In November 2006, it is revealed that it has been in merger talks with ITV. BSkyB moves swiftly to block the deal by acquiring a 17 per cent stake in the network. The ill-will spills over into carriage talks - and at the end of February, six Sky-branded channels are withdrawn from the Virgin Media cable platform.
July 2007: And, despite continuing doubts about whether it can ever be dominant in its sectors, Virgin Media wins interest from private equity companies. There is speculation that an £11 billion bid may be from The Carlyle Group.
Fast forward ...
2008: Having succeeded in its bid, Carlyle decides it can obtain best value by breaking up Virgin Media. Its duct infrastructure (including the wires in the ground) is sold to British Gas; its fixed-line telephony, broadband and TV operating divisions are sold to Carphone Warehouse; O2 agrees to take on its mobile customers; while BBC World absorbs the group's programming arm.
This article was first published on campaignlive.co.uk
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