BSkyB profit fears over Virgin row

BSkyB has warned profits could take a £20 million tumble if it fails to reach a deal with Virgin Media that would continue to allow its basic channels to be aired on the cable network.

Virgin Media customers face no longer having access to Sky One, Two, Sky News and Sky Sports News at midnight on Wednesday after talks on a contract renewal price between the two companies broke down.

Virgin Media, rebranded from NTL earlier this month, claimed on Friday that Sky had tried to deliberately sabotage the negotiations by doubling the price of its channels.

Chief executive Steve Burch called Sky's behaviour "heavy handed and anti-competitive".

BSkyB now claims Virgin Media appeared to have "walked away" from negotiations and that its profits will be hit if it cannot coax Richard Branson's group back to the table.

Chief financial officer Jeremy Darroch said: "Sky offered more channels to Virgin Media than ever before. We have invested in developing our channel offering and sought a fair price which reflects that fact."

He added: "With three days still to go before the deadline, we hope that Virgin Media will focus on getting a deal done rather on their PR offensive."

If an agreement is not reached, Sky said operating profits will fall between £15-£20 million in the remainder of its financial year to June 30.

This reflects lower carriage fees and weaker advertising revenues, but does not include the potential benefit of cable customers switching to Sky.

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