Virgin Media counts the cost of Sky disputeThousands of customers leave cable company
09 May 2007
Virgin Media today revealed the cost of its spat with rival BSkyB as it reported a loss of 46,900 customers in the first three months of the year.
The company said only 184,300 customers had signed up in the first quarter compared with 213,500 in the previous three months. The fall follows the withdrawal of BSkyB's basic channels at the end of February when the two groups failed to agree on contract renewal terms.
Virgin Media's net customer loss, which takes into account the number of new customers, less those leaving the group, was compounded by poor performance within its fixed line telephone offering and increased competition in the market.
The firm has been recording net customer losses since the second quarter of last year and said it expected this to continue into the second quarter of this year.
The number of customers switching, the so-called 'churn' rate, increased to 1.6 per cent from 1.3 per cent in the first quarter of last year.
But Virgin Media said the full impact on churn of the recent row with BSkyB was yet to be felt as customers are required to give 30 days notice to cancel contracts.
Virgin Media Chief Executive Steve Burch maintained the decision not to agree to the cost and contract terms of renewal for the Sky basic channels would be better for the business in the long run.
He said: 'Any company that takes channels off the air is going to take a hit, but if you look at the cost of what they were asking and the competitive issues, it's really the only decision we could make.
'We're not being cavalier about it, but we're comfortable that we made the right decision for the business and we believe that in the long term we made the right decision for the customer.'
Virgin Media viewers lost hit shows including 24 and Lost mid-series when the Sky basic channels were withdrawn at midnight, 28 February, after talks broke down between the two firms.
Virgin Media has since launched High Court proceedings against BSkyB in an attempt to resolve the dispute.
Virgin Media claims that BSkyB attempted to double the price for its basic channels and was using its dominance in the market to stifle competition - charges that Sky rigorously denies.
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