Virgin demands Sky arbitration move

Updated 14.27 Wed Feb 28 2007

Keywords: arbitration, BSkyB, Virgin Media, NTL

Virgin Media wants BSkyB to enter into arbitration talks to stop Sky pulling its basic channels from the newly-launched broadcaster.

The pair have until midnight to agree on a new contract or customers of Virgin Media - formed from the merger of NTL, Telewest and Virgin's mobile phone division - will see Sky One, Two, Sky News and Sky Sports News removed.

"Sky are asking us to pay double for channels that are declining in value to our customer base" - Chief executive Steve Burch

It has refused Sky's contract renewal offer as prices have escalated amid a declining viewing share, in what Virgin Media termed an "abusive and anti-competitive" move from BSkyB.

Sir Richard Branson's company said the Sky impact would be short-term as the numbers of customers defecting from the service would be offset by demand for its video-on-demand service in the long run.

And the savings from the loss of the contract would be ploughed back into improving the content and deal for customers, Virgin Media added.

Chief executive Steve Burch said: "I think the impact will be fairly minimal. Sky are asking us to pay double for channels that are declining in value to our customer base."

He added that Sky had "engineered" the withdrawal of its basic channels from the Virgin Media service from the beginning of the talks.

A BSkyB spokesman said Sky is committed to keeping its channels on cable and has been encouraging Virgin Media to come back to the talks table.