March 4, 2016
The quad-play nature of the Virgin Media cable based products has been a large part of the marketing exertion since Virgin Media launched, but the group has announced strategy to focus on its flagship cable broadband product. It is perhaps therefore not unexpected to see Goldman Sachs given the post of analysing the TV division with a vision to selling elements of it. The website brad intelligence has the original item.
Any sale of the groups TV assets will be complex by the fact that BBC Worldwide (the commercial arm of the BBC) has a half share in UKTV. No submission is being made that any deal would comprise the cable infrastructure, which is certainly the foundation product that Virgin Media is built around. It seems more probable that the TV production and content side of things will be up for sale as opposed to the cable TV and broadband services that people subscribe too.
Given that a magnitude of investment is required to get the fibre/co-ax hybrid network upgraded to manage the much vaunted 50Mbps broadband product, a sale of a quantity of of the family silver could finance this work. A big question is whether sufficient customers will be prepared 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.