Virgin Media posts loss of £50m

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Last Modified: 25 Feb 2009
Source: ITN

Virgin Media has blamed the consumer downturn for a quarterly loss of £50 million.

It comes after the company slashed the balance sheet value of its home shopping business Sit-up, which trades as bid tv, price-drop tv and speed auction tv.

Group operating losses, following the Sit-up write-down of £54.8 million, were £50.2 million compared with £17.8 million a year earlier, Virgin Media said.

At Virgin Media's core business, net customer additions of 14,800 in the final three months of the year were down from more than 24,000 a year earlier.

It sold 185,000 contracts for broadband, television, telephone or mobile phone services during the period, down from 272,100 in the same period of 2007.

However, the company said it was encouraged by a further increase in average revenues per user - to £42.30 - and a reduction in churn (the rate at which customers leave the service) to 1.2 per cent. It was 1.4 per cent in 2007.

Chief executive Neil Berkett said: "Record numbers of customers are now using Virgin Media's services, despite the current economic environment."

He described the customer response to the recent launch of 50Mb broadband as encouraging and said the company had also strengthened its position in the video-on-demand and catch-up TV markets.

"Over the course of 2008 we received more than half a billion views as on-demand TV came of age," Mr Berkett said.

Virgin said its total number of broadband additions stood at 57,100 in the final quarter of this year, compared with 68,700 in the previous quarter.

It said this reflected slower growth in the market as a whole and its own focus on higher revenue services offering faster broadband speeds.

The company reported 3.68 million broadband customers at the end of the period. It also added 44,500 television customers, leaving it with a total of 3.62 million at the end of the year.

Virgin is reportedly expected to decide later this week whether to sell its broadcast division, which includes 50 per cent of its UKTV joint venture with the BBC.

The content arm, excluding UKTV, generated fourth quarter revenues of £118.8 million, including £84.6 million from Sit-up. However, Virgin said year-on-year revenues and profits at the home shopping operation were lower due to the downturn in retail spending.

Last month, the Sit-up business stopped broadcasting one of its two Freeview channels following an unsuccessful auction process.

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