Virgin Media in first steps to divest itself of its TV operation
The quad-play nature of the Virgin Media cable based products has been a big part of the marketing effort since Virgin Media launched, but the group has announced plans to concentrate on its flagship cable broadband product. It is perhaps thus not surprising to see Goldman Sachs given the job of analysing the TV division with a view to selling parts of it. The website brad intelligence has the original item.
Any sale of the groups TV assets will be complicated by the fact that BBC Worldwide (the commercial arm of the BBC) has a half share in UKTV. No suggestion is being made that any sale would include the cable infrastructure, which is of course the core product that Virgin Media is built around. It seems more likely that the TV production and content side of things will be up for sale rather than the cable TV and broadband services that people subscribe too.
Given that a degree of investment is needed to get the fibre/co-ax hybrid network upgraded to handle the much vaunted 50Mbps broadband product, a sale of some of the family silver could fund this work. A big question is whether enough consumers will be willing to pay the price premium a 50Mbps connection will command when the 20Mbps product is currently £37 a month. Looking at the upload speeds for Virgin Media customers, the number of tests with an upload higher than 512Kbps was 12,600 out of 44,000 tests (in the period 1st December to 25th February and between the hours of 18:00 and 22:00). Which if use of our speed tester is representative of the whole Virgin Media consumer base suggests 28% of the groups customers are on a 20Mbps product now.