BSkyB in deal to acquire VirginMedia channels

Portfolio of basic pay-channels includes Living, Bravo and Trouble

LONDON – In what could be the first phase in a merger and acquisitions spree across the U.K. media market in the year to come, satcaster BSkyB has agreed to a £160 million ($233 million) all-cash deal to acquire VirginMedia's portfolio of basic pay-channels, which includes Living, Bravo and Trouble.

The deal – which still requires regulatory approval - would broaden Sky's channel portfolio and give chief executive Jeremy Darroch control of the biggest group entertainment pay channels in the U.K.

As part of the deal, Sky has also secured long-term carriage for a range of its channels on Virgin's broadband and digital TV platform, which reaches 3 million TV homes.

Sky will acquire VMtv for a total consideration of up to £160 million in cash, with £105 million ($153 million) paid on completion, with the remainder paid following the regulatory process.

The acquisition will expand Sky's portfolio of basic pay TV channels and the two companies will merge their advertising sales operations from January.

As well as carrying Sky's existing portfolio of channels, the two companies have also agreed to new carriage terms that will see Virgin distribute Sky's basic tier HD channels and premium HD sport and movie channels for the first time.

"VMtv is an attractive investment opportunity which complements our existing content business and delivers strategic and financial benefits," said Darroch.

"We are pleased that, through commercial negotiation, we have been able to ensure wide distribution of our channels to a growing pay TV universe."

Virgin Media boss Neil Berkett said the deal had generated substantial value and signaled renewed focus on its broadband business.

"It will allow us to focus more closely on our strategy of exploiting Virgin Media's super-fast connectivity to offer our customers a range of the very best content through a highly versatile next generation entertainment application," he said.

The acquisition of VMtv involves Sky acquiring LIVING, LIVINGit, Challenge, Challenge Jackpot, Bravo, Bravo 2 and Virgin1.

Sky will not license the Virgin brand and will announce a rebrand for Virgin 1 when the deal is completed.