Virgin losing customers to rival BSkyB

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LONDON -- U.K. cable group Virgin Media appears to be losing out to arch-rival BSkyB in the battle for U.K. pay-TV subscribers as it announced Wednesday that 47,000 customers quit the service in the first quarter despite a record £25 million ($50 million) marketing and re-branding program.

Last week, BSkyB said that it had added 51,000 new subscriber homes over the same period.

Virgin Media, in which entrepreneur Richard Branson is the biggest shareholder, announced that operating losses widened to £15.3 million ($30.6 million) from £9.2 million at the same stage a year ago on revenues down 5% at £1.02 billion ($2 billion).

Net losses for the first quarter were marginally wider at £120.3 ($220.6 million) million compared with £120 million in the same period in 2006.

Chief executive Steve Burch warned that second-quarter subscriber figures could also plunge, following a damaging carriage fees dispute that has seen Sky's entertainment channels switched off in Virgin's 3.5 million U.K. homes.

"We're not really sure what the impact in Q2 (April to June) will be, but we're flagging up the possibility that TV additions may not be as strong and could be negative," he said on a conference call.

Gross customer additions in the first quarter were 184,300, down from 213,500 in the fourth quarter "due to the loss of BSkyB's basic channels from our platform and to increased competitor activity," Burch said. During the period, the company unveiled a high-profile marketing campaign fronted by actress Uma Thurman to attract customers to the new service.

The company also said that more than 63,000 telephony customers quit the service during the period.

"Our first quarter of 2007 shows strong growth in TV and broadband, while fixed-line telephone continues to struggle," Burch said.
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