Media News

UPDATE 1-Virgin Media signs exclusive UK deal with TiVo

* 1000s of TiVo boxes for existing customers over Christmas

* Cost 199 pounds per box, 26.50 per month

* Move towards becoming entertainment provider

(Adds details, background)

LONDON, Dec 1 (Reuters) - Virgin Media VMED.O has signed an exclusive UK deal with U.S. digital video-recorder maker TiVo TIVO.O, a move it said on Wednesday marked the start of its transition from a cable operator to an entertainment provider.

Virgin, which sells broadband, telephony and pay-TV services to about 4 million customers in Britain, said it would have thousands of TiVo boxes available over Christmas for existing customers and would start selling them externally next year.

The boxes will allow viewers to combine live television viewing, catch-up TV including BBC iPlayer [BBC.UL], on-demand programming and Web applications such as Facebook, and will be able to store 500 hours of standard-definition video.

“This is an opportunity for Virgin Media to depart from any legacy it had in terms of coming second in the TV space,” Chief Executive Neil Berkett told journalists on a conference call.

Virgin Media competes with satellite pay-TV operator BSkyB BSY.L as well free-to-air broadcasters including the state-owned BBC. Larger broadband rival BT BT.L has also launched a TV service delivered via the Internet, BT Vision.

Sky previously had an agreement with TiVo but later began selling its own set-top boxes instead, leading to TiVo’s withdrawal from Britain.

Berkett said the Virgin deal was the first wholesale agreement for TiVo, which pioneered digital TV recording software but whose U.S. retail sales have been falling amid competition from cable companies with cheaper boxes.

Virgin has built its customer base by offering the highest broadband speeds in Britain -- up to 100 megabits per second for households on its network -- on which it now wants to capitalise by cross-selling higher-value services.

It says its network capacity allows it to offer 10 megabits of extra, dedicated bandwidth for the TiVo service, meaning viewers will be able to record two channels while watching a third without disrupting other household Internet activities.

The Virgin-branded TiVo service will cost 199 pounds ($309) for the box plus 26.50 pounds per month. Sky TV packages range from 19.50 to 52 pounds per month.

Over time, Berkett said, TiVo would become the centre of Virgin Media’s offerings, rather than a premium service.

Reporting by Georgina Prodhan; Editing by Sarah Young