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Earnings: Virgin Media Hikes Prices To Improve Results

Virgin Media (NSDQ: VMED) will increase TV, phone and bundle prices from June 1 to turn around falling earnings. Revenue fell from £1.021 billion in Q107 to £1.001 billion, “due to seasonally reduced content revenue and reduced mobile revenue”, though the overall operating loss reduced from £17.8 million last quarter to £4.6 million. At 181,400, VM added 2,900 fewer cable customers than Q107 and 43,700 fewer than the previous three months.

Broadband: The company continues its new strategy of selling broadband as its “premier” product. Broadband revenue fell from £106.2 million in the previous quarter to £88.4 million, explained by seasonality, but VMED’s off-net broadband operation, through which it provides access to 300,000 non-cable customers, swung to a £7.8 million loss from a £9.7 million gain a year ago.

UKTV: The UKTV channel portfolio JV with BBC Worldwide earned VMED just £6.2 million in the quarter – up from £300,000 in Q407 but down from £7.1 million in last year’s corresponding quarter. This may yet invite suitors rumoured in Sunday newspapers over the last few months.

TV: VMED will charge £1.50 extra for its XL TV package and £1 for “most of our standard bundles”, arguing it has, over the last year, provided better value for money through increased VOD content, free Setanta Sports for XL customers, higher broadband speeds and the just-launched BBC iPlayer. That last justification may not wash as the BBC’s public services are supposed to be free by design. Some 48 percent of TV customers are now using VOD each month – an average of 24 times per month per customer, giving 36 million VOD views in the quarter – that’s 10 percent more than the previous quarter. It said iPlayer over cable “gives VOD a new impetus and help establish on-demand as a genuinely mainstream TV service”.

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