Virgin bullish on subscriber losses
Virgin Media expects to return to subscriber growth in the second half of this year after "weathering the storm" over the loss of Sky's basic channels, the company's chief operating officer said today.
Neil Berkett admitted that Virgin Media management had initially expected cable TV customer losses to be in the "tens of thousands" - analysts predicted around 30,000.
However, he added that today's second quarter figures showing net TV viewer additions of 2,200 proved that the impact of losing Sky's channels had been "contained" to the first half of this year.
"The total impact [of the loss of Sky's basic channels] is less than we expected and better than we initially predicted," he said.
"The loss from Sky has been contained to the second quarter. We are comfortable the impact of Sky's withdrawal is behind us. Overall we expect positive net customer additions for the second half of the year."
Mr Berkett did admit that Virgin Media's average revenue per user (ARPU) figure had taken a hit because disgruntled TV viewers leaving over the Sky dispute "tended to be triple-play customers, higher ARPU customers". A triple-play Virgin Media subscription covers TV, fixed-line phone and broadband.
ARPU fell from £42.75 to £42.16 in the quarter, however Virgin expects this figure to "stabilise and return to growth".
Mr Berkett said Virgin Media would still "love to have Sky basics back on the [cable TV] platform".
He added that the company has held discussions with the National Consumer Council - which has threatened to use its power to lodge a "super-complaint" to Ofcom to intervene in the Sky dispute - but did not elaborate on whether any progress had been made.
Mr Berkett pointed to the turnaround in telephony as an example of the stabilisation in the business.
In April, a month after Sky withdrew its basic channels, Virgin Media saw telephony subscriber losses of 33,000; by the end of June this was down to 7,200 net disconnections.
In an analyst's note Citigroup Research said that "the fundamentals of Virgin Media remain challenging", because the customer base and ARPU "came under pressure" in the second quarter of 2007.
Mr Berkett was keen to emphasise that video-on-demand services and Virgin Media's V+ personal video recorder were "key growth drivers" for the business.
The number of households with V+ boxes surged by 46% across the quarter to 167,000, although Mr Berkett tempered this by pointing out that this still accounted for just 5.4% of Virgin Media's entire TV subscriber base.
He added that personal video recorders were proving a key drawcard for new customers to Virgin Media, with 25% of June sales going to non-Virgin subscribers.
Broadcaster UKTV, the programming joint venture between Virgin Media and BBC Worldwide that operates channels including UKTV Gold, reported total revenues of £49.5 million in the second quarter, and £99.1 million for the first half of the year, from subscription and advertising revenue.
Regards Satdude.
Virgin Media expects to return to subscriber growth in the second half of this year after "weathering the storm" over the loss of Sky's basic channels, the company's chief operating officer said today.
Neil Berkett admitted that Virgin Media management had initially expected cable TV customer losses to be in the "tens of thousands" - analysts predicted around 30,000.
However, he added that today's second quarter figures showing net TV viewer additions of 2,200 proved that the impact of losing Sky's channels had been "contained" to the first half of this year.
"The total impact [of the loss of Sky's basic channels] is less than we expected and better than we initially predicted," he said.
"The loss from Sky has been contained to the second quarter. We are comfortable the impact of Sky's withdrawal is behind us. Overall we expect positive net customer additions for the second half of the year."
Mr Berkett did admit that Virgin Media's average revenue per user (ARPU) figure had taken a hit because disgruntled TV viewers leaving over the Sky dispute "tended to be triple-play customers, higher ARPU customers". A triple-play Virgin Media subscription covers TV, fixed-line phone and broadband.
ARPU fell from £42.75 to £42.16 in the quarter, however Virgin expects this figure to "stabilise and return to growth".
Mr Berkett said Virgin Media would still "love to have Sky basics back on the [cable TV] platform".
He added that the company has held discussions with the National Consumer Council - which has threatened to use its power to lodge a "super-complaint" to Ofcom to intervene in the Sky dispute - but did not elaborate on whether any progress had been made.
Mr Berkett pointed to the turnaround in telephony as an example of the stabilisation in the business.
In April, a month after Sky withdrew its basic channels, Virgin Media saw telephony subscriber losses of 33,000; by the end of June this was down to 7,200 net disconnections.
In an analyst's note Citigroup Research said that "the fundamentals of Virgin Media remain challenging", because the customer base and ARPU "came under pressure" in the second quarter of 2007.
Mr Berkett was keen to emphasise that video-on-demand services and Virgin Media's V+ personal video recorder were "key growth drivers" for the business.
The number of households with V+ boxes surged by 46% across the quarter to 167,000, although Mr Berkett tempered this by pointing out that this still accounted for just 5.4% of Virgin Media's entire TV subscriber base.
He added that personal video recorders were proving a key drawcard for new customers to Virgin Media, with 25% of June sales going to non-Virgin subscribers.
Broadcaster UKTV, the programming joint venture between Virgin Media and BBC Worldwide that operates channels including UKTV Gold, reported total revenues of £49.5 million in the second quarter, and £99.1 million for the first half of the year, from subscription and advertising revenue.
Regards Satdude.