BSkyB favored to buy Flextech channels

Deal would see Living, Bravo and Trouble added to lineup

LONDON -- They have been on the auction block for more than a year, with buyers from BBC Worldwide to Viacom-owned MTV looking them over and kicking the tires.

But now BSkyB is emerging as the favored contender to pick up Virgin Media's Flextech family of channels, with an announcement expected as early as next week.

The deal -- thought to be worth as much as £160 million ($233 million) -- would see Sky add the popular pay TV channels Living, Bravo and Trouble, to the satcaster's own portfolio of entertainment channels.

Female-skewed Living has aired such shows as "Grey's Anatomy," "Most Haunted," and "Most Haunted" while Bravo airs blood-and-sandals epic "Spartacus" and a range of shows, including "Dog The Bounty Hunter" and "World's Strongest Man."

A deal is thought likely to enable Virgin Media to use the cash to shore up its debt refinancing and end a decade of acrimony between the U.K.'s biggest pay TV rivals.

In exchange for the sale, Virgin is expected to secure a long-term carriage deal guaranteeing Sky's entertainment channels on its cable platform, as well as a possible change in the pricing of Sky's premium-priced sport and movie channels.

With revenues of £4.4 billion ($6.3 billion) for the first nine months of the year and operating profits of £618 million ($900 million) over the same period, BSkyB has become the strongest player in the U.K. media market -- bar the not-for-profit BBC -- which has over £3.5 billion ($5.1 billion) a year in public subsidy.

Under chief executive Jeremy Darroch, Sky has broadened its original production base, bolstered its subscriber numbers, and added HD and 3D content to its product mix.

The result is a strengthened satellite broadcaster that has bucked the recession and is well-funded for the forthcoming consolidation period that many analysts predict will be forced on the U.K.'s ailing media sector as free-to-air advertising revenues continue to come under fire.

With RTL-owned Five believed to be on the market, a deal to acquire Flextech's digital channels could be just the start.
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