Virgin Media admission: We aimed too high
EmptyVirgin Media acting CEO Neil Berkett on Tuesday conceded that the cable company has lost the battle for premium-priced television to rival British Sky Broadcasting, saying it tried to implement too many business strategies when it launched in the spring.
Berkett said Virgin Media instead will focus on selling "midrange" television packages, video-on-demand and high-speed broadband to its customers rather than bidding for premium sports and promoting the "quad-play" strategy — offering cellular and fixed-line telephony as well as broadband Internet and pay TV.
Berkett, who took over as acting CEO in August, also dismissed Virgin's bid for ITV 14 months ago as "a moment in time," apparently signaling that the U.K.'s biggest cable company will not reconsider another bid.
Speaking Tuesday at a Broadcast Press Guild lunch, Berkett told reporters that the cable company could not see any profit in the premium television business.
"There is no economic advantage for us in premium television, where there is a very strong competitor. There is no profit pool in premium TV," he said. "We believe we have a superior product in midrange television, so let's focus on that. That is where the profit is going to come from."
Virgin Media has 3.3 million cable television cable customers, the majority of whom take basic-tier cable channels and can access 4,600 hours of VOD content, which Berkett said has proved "very popular."
"Usage of VOD content has more than doubled in the last 12 months, and users have really fallen in love with the product," he said.
Berkett said Richard Branson's Virgin Media will focus less on the so-called "quad-play" offering that it heralded at its launch in the spring and instead will focus on delivering a range of broadband Internet speeds of up to 50MB/second.
He also appeared to dismiss the prospect of a repeated approach for commercial broadcaster ITV, which had been pushed forward by Virgin head Branson in November 2006.
"The bid for ITV was a moment in time, which was a view of the apparent value of the asset, a view of what Virgin Media could do with that asset and a view of potentially monetizing some of our tax position," Berkett said. "The market is completely different today to what it was then, and for us to reconsider anything in the acquisition of a production (company), an ITV look-alike, we would have to view it on its merits."
But he dismissed the suggestion that Virgin Media was junking the strategies it had trumpeted 12 months ago.
"I don't think it was a mistake to launch in the way that we did," he said. "Almost without exception, the launch strategies were all right. It's just that there were too many of them."