Virgin Medias 3.3 million cable customers will have woken to a disturbing sight this morning. No SKY...no dummy not what's outside, that thing in the corner SKY TV.
The previous agreement between the two expired at midnight yesterday and with both sides failing to come to terms on a new deal, access to the basic Sky channels is now lost to Virgin Media customers
Of course, both sides blame each other for the communication breakdown. A statement issued by Sky today claims that Virgin Media rejected all of its proposals, "including our latest offer of just 3p per customer per day." A statement issued by Virgin Media meanwhile claims that Sky rejected all of its proposals and "demanded that the fees for these channels be nearly doubled".
(Now 3.3 million viewers @ 3p a day is a lorra lorra money, as our Cilla would say, so lets work out just how much we are talking about. 3p a day times 365 days is £10.95 per customer and then times those 3.3 million or 3,300,000 is a whopping £36,135,000.00 that's just over 36 million pounds, sure is a lorra lorra money)
With much of its most popular programming switched off overnight, Virgin Media risks seeing a steady stream of its 3 million customers defecting to Sky.
At present though, Virgin Media does not seem overly worried about its potential loss of customers. It has no plans to compensate for the loss of the Sky channels and maintains that it offers good value. In fact, the network has made light of the situation by renaming Sky News, "Sky Snooze try BBC" on its electronic TV guide.
Of course, Virgin Media will inevitably lose some of its customers to Sky, but in an increasingly connected world, people who are determined to watch the next episode of 24 will watch the next episode of 24 by fair means, or often, by foul. Indeed, the very fact that shows are not freely available will be encouragement enough for some who will track them down outside of the Sky umbrella, free of charge and free of ads.
The longer the present stalemate continues, it is arguably Sky that stands to lose the most. In the short-term it may win a few more subscribers to its service, but overnight, Sky has lost the ability to reach 3.3 million Virgin customers with its advertising. This could potentially result in the loss of £60m of advertising revenue each year.
It is widely believed that Sky plans to withdraw Sky News and Sky Sports News from Freeview very soon, a move which would further shrink its potential audience and impact on the advertising revenue so essential for securing the biggest television shows. Of course, Sky may be doing this for a calculated reason. Analysts believe that if Sky were to bundle its basic channels together in a package and levy a small charge directly to Freeview and Virgin Media customers, they would have a revenue stream potentially more valuable than advertising.
Above all though, Sky is unlikely to back down as it is unwilling to lose face in the larger war of which the current stalemate forms only a small battle.
So there you have, Mr Murdoch would risk £60M to gain just £36m...duh .. . . . . . . I wonder who is really LOST?? maybe Mr M should have a word with Bart or Homer as they seems to have friends, maybe Homer could have a word with Bill Gates or Tony Bliar (well maybe not Tony bLiar, wmd's and all that lot, he might think it sounded a good deal)
I for one will carry on with my VM package and who knows, maybe we might get a months free viewing or a months free view of the movie channel, but whatever the outcome, I can't be ar*ed changing my phone, being without a service, changing my DD, years ago we only had 4 channels and we never grumbled so what's wrong now?