BSkyB shares climb on acquisition of Virgin Media Television

The UK’s biggest subscription television provider British Sky Broadcasting Group (LON:BSY) has announced today that it has reached an agreement with Virgin Media (LON:VMED) on the sale of Virgin Media Television, or VMtv, for £160m.

Rob Hull
shareprices.com - Friday, June 04, 2010

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BSkyB has bought the rights to Virgin Media Television

BSkyB released the announcement this morning with £105m of the total paid on completion of the deal and the remainder paid following the regulatory process.

The move will expand Sky’s portfolio of basic TV channels and eliminate the carriage fees it currently pays for distributing VMtv channels on its service. Sky will also assume responsibility for selling advertising to the VMtv channels from January 2011 and new carriage agreements will secure wholesale distribution of Sky’s basic channel line-up along with the VMtv channels on Virgin Media’s cable TV service.

And for the first time Virgin Media will have the option of carrying any of Sky’s basic HD channels and all Sky Movie HD channels.

BSkyB CEO 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 deal has excited investors today, along with more positive activity for the subscription TV giant.

This morning the group would have been encouraged by reports that Channel 4 has been legally barred from buying Channel Five, which has been put up for sale by its owner RTL.

BSkyB and ITV (LON:ITV) are currently in the running to buy the broadcaster and appear to be hot favourites with Channel 4 being slapped with provisions in the Broadcasting Act 1990.

Sky has also revealed that it has flicked the switch to allow its set-top boxes to connect to the web.

So far only members of staff can use the function with 2.5m Sky customers with an HD enabled box being able to use it in the winter.

And to continue a fruitful day for the group, J.P. Morgan has raised its rating for the satellite broadcaster to overweight from neutral.

The broker said margins had reached an inflection point and that strong earnings growth now looked achievable.

BSkyB gained over 2.4 per cent to a day high price of 594p putting the group amongst the top FTSE 100 risers this morning.

 

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