Branson party launches Virgin Media


LONDON -- British entrepreneur Richard Branson will host a party Thursday night for about 2,000 of his closest friends to celebrate the launch of Virgin Media, the latest entrant into what is becoming an increasingly competitive U.K. market for broadband Internet, television and telephony services.

But behind the glamorous facade, Branson is gearing up for a bloody corporate challenge to the might of the U.K.'s pay television leader, BSkyB, and the signs are that the gloves are already off.

The flamboyant showbiz launch -- to be held at London's Cirque Hippodrome -- will be in characteristic buccaneering Branson style, with organizers promising a host of celebrities and entertainment acts as befits the man who signed the Sex Pistols and Simple Minds to his Virgin Music label (now owned by EMI).

On Wednesday, Virgin Media offered a taster for the launch with the announcement it had signed a $36 million deal with Uma Thurman to promote the new multimedia service, which marketing managing director James Kidd promised would be "the most exciting and the biggest Virgin-branded company in the world."

Branson is promising to offer the U.K.'s first "quad-play operator," offering bundled digital television, Internet, fixed and mobile telephony, following the £800 million ($1.58 billion) acquisition of his mobile telecoms business Virgin Mobile with struggling cable operator NTL last summer.

He hopes to use the popularity of the Virgin brand to drive through a customer-friendly cable revolution that the cable sector's checkered history has thus far failed to deliver.

BSkyB has not been slow to grasp the importance of a broadband offering, and last month launched its own triple-play service -- dubbed See, Speak, Surf -- to steal a march on its competitor.

The Virgin package has two advantages over BSkyB's current digital lineup: a two-way broadband pipe and the combination of mobile services.

So far, BSkyB chief executive James Murdoch has maintained a studied nonchalance over the Virgin Media launch, citing Sky's customer service credentials and television dominance.

"I think there will be a huge amount of noise (about the launch) ... but basically customers are pretty smart," Murdoch said last week, as the satcaster launched its second-quarter figures.

"When you look at what we are doing in the marketplace today ... you can get (from us) a dramatically better-quality TV, broadband and telephony experience than you can from Virgin. We are very confident that the product we have is of better quality, in terms of TV and broadband, high definition and telephony."

But behind the scenes there is concern. Sky's lowered profits, slowed growth and higher churn in what should have been a good quarter have made the satcaster look more vulnerable than at any time in its recent history.

And Virgin is not the only competitor it faces. At the start of the year, BT Vision launched offering a PVR service, on-demand television and movies and a freeview box offering 30 channels of free digital television. Earlier this week, Freeview announced its most successful Christmas to date, with more than 2 million new additions, while next year telecoms group Tiscali aims to launch a VOD, broadband Internet and phone service to 5 million homes across the country.

Branson is no stranger to corporate conflict. In fact it could be argued that he goes out of his way to create it. And though some analysts doubt whether there is really an appetite for quad play, they recognize he has the kind of marketing appeal that consumers love.

"There are a number of values associated with the Virgin brand, which includes fun and being young at heart. That's what they are looking to do (with the rebranding). That's becoming increasingly important because the market is so competitive," said Ian Watt at research house Enders Analysis.

Over the past three decades, the celebrity business tycoon has at various times launched -- and sometimes sold -- Virgin-branded businesses as disparate as music labels, airlines, train services, cosmetics, cinema chains, music retail outlets and soft drinks.

Whether Branson can become a digital media mogul is yet to be proved. But one thing is certain, he will relish the challenge.