Sky buys TV channels from Virgin in £160m deal

Satellite broadcaster BSkyB today acquired television channels Living and Bravo as part of a £160 million deal with rival Virgin Media.

The purchase of Virgin Media Television (VMtv) also involves Challenge, Challenge Jackpot and Virgin1, which will be rebranded.

As well as expanding its range of basic pay TV channels, Sky said the deal eliminated the carriage fees it currently pays for distributing Virgin channels on its platform.

Virgin Media said the deal had generated substantial value and would allow it to offer its cable customers an enhanced range of Sky services, including HD channels and on-demand content.

Today's sale agreement will see Sky pay £105 million on completion of the deal and the remainder following regulatory approval.

BSkyB and Virgin clashed in 2007 in a legal battle over how much they would pay each other to host their "own-brand" channels.

Before today's deal, BSkyB had previously argued in court that Virgin's channels were almost worthless to its subscribers.

Virgin said its seven channels - which span pay and free-to-air television - reach more than 24 million adult viewers every month.

This move means distribution of Sky's basic channel line-up, including Sky1 and Sky Arts, on Virgin Media's cable TV service is now secured.

Virgin Media said the sale would allow it to focus on providing subscribers with "super-fast" cable TV and broadband provision.

Neil Berkett, Virgin Media chief executive, said: "The sale of our channels business has generated substantial value.

"Together with the new commercial agreements we've announced today, 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."

Under the deal, Virgin Media has agreed for the first time to offer customers Sky's basic HD channels, Sky Sports HD1 and Sky Sports HD2, and all Sky Movies HD channels.

It will also make Sky's basic and premium channels available to subscribers through its on-demand TV service.

BSkyB chief executive Jeremy Darroch said: "VMtv is an attractive investment opportunity which complements our existing content business and delivers strategic and financial benefits.

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

The firm launched Virgin1 in October 2007 although channels such as Living and Bravo came from the former ntl/Telewest business. This in turn merged with Virgin Mobile in 2007 and was then rebranded as Virgin Media.

The Living channel is described as the "ultimate entertainment destination in pay television, full of guilty pleasures and trashy glamour", while Virgin1 is described as being "intelligent tabloid TV at its best" and hosts shows such as Terminator: The Sarah Connor Chronicles.

Virgin Media also offers customers broadband and telephone services alongside TV channels.