Media Perspective: Virgin or no Virgin, getting into bed with Carlyle is sensible

Not many people are happy about being called a virgin, and it seems the same could soon be said for Virgin Media. The company, which was approached last week by the US private equity group Carlyle with an £11 billion offer, is reportedly considering dropping the big V if the sale goes through.

It has only been five months since ntl:Telewest rebranded as Virgin Media, but the collapse of the Sky carriage deal and the ensuing legal wrangles, a flirtation with ITV thwarted by Sky, churning customers and hefty losses have not made for plain sailing.

So, there was no big surprise at the news that the company was up for sale. The City is behind it, with the opinion that Virgin Media's deep structural and management problems could be best tackled by a private equity company. If Carlyle can stabilise the company and get it running effectively, it stands to gain a lucrative "quad play" of TV, broadband, fixed line and mobile, with distribution over Freeview and pay-TV and a potentially strong content business - with or without the Virgin name.

And the sale can only spell good news for the TV market.

The ongoing spat between Sky and Virgin Media has not been healthy for TV. Despite the market's appetite for a genuine competitor to Sky, Virgin has largely failed to ignite the market, and the removal of Sky's basic channels from its platform has caused significant damage to both companies. While Virgin Media customers churned, Sky's channels lost impacts, which resulted in angry media agencies demanding compensation for their clients. Both broadcasters have refused to back down, and the industry would be glad to see the end of the squabbling.

If the bid is accepted, it will undoubtedly patch up the carriage deal, with Sky restoring the basic channels to the cable platform and ending the legal wrangle. It will also pump cash into developing the services, with digital upgrades to analogue areas. The boost to Virgin's coffers and the clearance of its £6 billion debt would allow the company to make significant investments in marketing, content and programming.

According to one media agency observer: "TV has taken a positive turn and there is buoyancy in the market. The only real negative is the Sky and Virgin fight. If that were to change, it could only be a good thing for the market."

As would the competition a pumped-up Virgin Media could bring. With more money to invest in programming and marketing, Virgin could deliver on its original offer to invigorate the market and offer a truly appealing quad play.

And as for the name? Sir Richard Branson is said to be keen on the sale because he fears the company's service problems could harm the Virgin brand. Maybe one less Virgin in the world could be a good thing.

- Ian Darby is away.

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