Virgin to see Sky in court unless dispute over charges is settled

By Saeed Shah

Published: 06 March 2007

Virgin Media threatened to take its dispute with BSkyB to the High Court yesterday in a further escalation of the bitter row between the two pay-television companies.

Virgin Media, where Sir Richard Branson is the leading shareholder, gave Rupert Murdoch's Sky 30 days to resolve the row over carriage fees or it will file a lawsuit. At issue is how much each broadcaster pays for carrying the channels provided by the other.

Virgin Media's chief executive Steve Burch said: "We are not interested in prolonging this dispute any longer than necessary, but we will not allow Virgin Media or our customers to be the victim of Sky's market power. In the interest of the consumer, we want these issues resolved quickly."

Virgin Media's case will centre on allegations of predatory pricing and abuse of its dominant market position by Sky. Last week Virgin urged Sky to put the disagreement in the hands of a third-party arbitrator, an offer that has been refused by Sky.

Virgin has already signed a deal with Sky for the carriage of its channels, which include Living and Bravo, on the Sky satellite platform but it now says that arrangement should be revoked as it was agreed under duress. There has as yet been no deal on the carriage of Sky's basic channels - which includes Sky One - on the Virgin network and these were last week taken off the air in the 3.3 million cable homes.

According to Virgin, Sky is trying to charge nearly double its previous fee for its channels, at £48.5m a year. Virgin claims that Sky forced it to accept an 85 per cent reduction in the price paid for Virgin channels - thought to be about £5m a year.

Sky has accused Virgin of using the dispute as part of its marketing strategy. The satellite broadcaster said it would "defend itself vigorously should Virgin Media decide to extend its PR campaign to the courts".

"Virgin Media is not a victim, and its attempt to portray its actions as being in the interests of consumers ring hollow. We urge Virgin Media to set aside its threats and posturing and engage genuinely in a sensible negotiation to restore Sky's basic channels to its customers," Sky said.