Costly content
While Virgin Media may well be setting the pace when it comes to UK broadband, its TV content businesses dragged the company back into the red in Q4 of 2008.
Virgin Media's content business is comprised of two ventures. VMtv runs seven channels including Bravo and Living and is the 50 percent owner, with BBC Worldwide (the commercial arm of the BBC), of UKTV. Sit-up channels specialises in shopping and auction TV channels.
"On January 6, 2009, Sit-up ceased broadcasting on one of its two Freeview channels following its unsuccessful bid in the auction process for the renewal of its license," revealed the Virgin Media press release.
"As a result of the loss of Sit-up's second Freeview channel and the deterioration in the outlook for Sit-up's business, management is reviewing the implications of these developments on Sit-up's business model and considering how best to address them. An impairment charge of GBP 54.8m this quarter has been made for goodwill and other intangible assets relating to Sit-up."
Virgin Media's operating loss for the quarter was £50.2, so without the impairment charge it would have made a small profit. Revenues fell slightly to £1.033 billion from £1.051 billion a year ago.
There is continued speculation that Virgin Media may be considering selling its TV content businesses, but the status of a possible merger of BBC Worldwide and Channel 4 will probably need to be resolved before Virgin Media's stake in UKTV can be sold.
