Virgin Media sees pay-TV changes by July

LONDON Thu Dec 3, 2009 10:50am EST

LONDON (Reuters) - British cable operator Virgin Media VMED.O believes new rules governing pay-TV could be in place as early as next July, potentially allowing it to make a big marketing push for the next soccer season.

The company hopes regulator Ofcom will force dominant pay-TV firm BSkyB BSY.L to make its most sought-after content, including sports and movies, available to other broadcasters more cheaply. Sky has already said it would fight such a ruling.

Speaking at the Reuters Global Media Summit, Chief Customer and Operations Officer Andrew Barron said if the decision was approved, the group would increase marketing around its premium products such as Sky Sports which would in turn boost BSkyB.

"It's not (currently) economic for us to push a product on which we reckon we lose money," he said. "Why would we do that?"

Virgin Media already offers Sky's sports channels but, under the Ofcom ruling, would be able to carry them at a cheaper rate.

A Virgin Media spokesman said the company expected a final verdict by March with new terms in place in time to market the 2010 soccer season. The season starts in August with marketing starting a month or two before.

Regulator Ofcom is investigating the market after complaints from Virgin and others, who want to carry the popular content from Sky but say they cannot make money from it. They also accuse Sky of suppressing competition.

BSkyB has said it would launch legal action if forced to open its channels at a set rate, as Ofcom has indicated, but Virgin said it believed the barriers to such an injunction would be high.

If introduced, the agreement would be a boost to Virgin Media, which has turned itself around under Chief Executive Neil Berkett to offer the fastest residential broadband in the UK, a popular video-on-demand service and fixed and mobile telephony.

Barron said the group had successfully trialled broadband speeds of up to 200 megabits per second, but had no current plans to increase its fastest available offering of 50 Mb/s, which has drawn new customers to the network.

Virgin is able to offer such speeds via its cable network, setting it apart from rival broadband providers who rely on slower copper offerings.

Asked if Virgin expected to introduce price rises, as some rivals have begun to do after years of cuts, Barron said he expected to see a split developing between the cost of the most basic services and those offering faster speeds and more services.

"I think you'll see over time the price of those two things continue to separate, which suits us just fine," he said.

Barron said the group was also focusing more on its mobile services, and was looking to offer more high-end handsets such as its recent Blackberry RIM.TO offering to its increasingly affluent customers.