Virgin cable customers to lose UKTV channels
Dave and Gold channels axed from Virgin schedules after row over access to on-demand programmes
Millions of homes are due to be cut off from some of Britain’s most popular television channels after Virgin Media labelled the BBC a “dinosaur” with a “broken business model” in a row over fees for UKTV, the broadcaster behind Dave and Gold. Ten channels run by UKTV, which is jointly owned by the BBC and Discovery, will be switched off in cable homes at midnight on Saturday and replaced with new services. It is expected to cost UKTV about £50million in lost revenue.
MILLIONS of homes are due to be cut off from some of Britain’s most popular television channels this weekend after Virgin Media labelled the BBC a “dinosaur” with a “broken business model” in a bitter row over fees for UKTV, the broadcaster behind Dave and Gold.
Ten channels run by UKTV, which is jointly owned by the BBC and Discovery, will be switched off in cable homes at midnight on Saturday and replaced in menus with new services.
The blackout is due to be imposed after weeks of wrangling over the fees Virgin Media pays to carry the channels. It is expected to cost UKTV in the region of £50m in lost fees and advertising revenue per year.
Virgin Media, which has nearly four million pay-tv subscribers, said it had walked away because the BBC had refused to include in the deal rights to watch its programmes on demand. UKTV produces some of its own programmes but BBC repeats are the bedrock of most of its schedules.
David Bouchier, Virgin Media’s entertainment chief, said the BBC was refusing to allow UKTV to provide on-demand access to Dave stalwarts such as Top Gear because it wants to use its vast programming archive to create a rival to Netflix and charge paytv operators for it separately.
Mr Bouchier said: “We are not prepared to play that game with them. We are an on-demand platform.
“Viewing behaviours amongst our customers are changing and we are committed to investing in the kind of programming they want to watch, whenever and however they want to watch it.”
He attacked the BBC’S commercial arm, BBC Studios, for selling on-demand boxsets to Netflix and Amazon, while at the same time refusing to provide them via UKTV to pay-tv operators. “They are giving a leg-up to Netflix and damaging UKTV. It is absolutely nuts,” he said.
“They are acting like a dinosaur in the modern age. UKTV is a gas lamp in an electric world. They have a completely broken business model.”
Darren Childs, chief executive of UKTV, said the blackout threat was a result of Virgin Media’s demands for a “huge cut in fees” that “doesn’t reflect the value we bring to customers”.
“UKTV’S channels account for over a quarter of pay entertainment channel viewing within Virgin Media’s basic subscription pack, while our on-demand viewing has grown by over a third in the last year. The money we receive from platforms helps to pay for our record investment in high-quality programmes, which we increased to more than £150m in the last year.”
Sky agreed a new long-term deal with UKTV last year.
The broadcaster’s dispute with Virgin Media strikes at the heart of the strategic puzzle faced by the BBC as viewing shifts towards on-demand services. It only offers programmes for free on demand for a few weeks before seeking to exploit them commercially, limiting the ability of the iplayer to compete with Netflix.
The BBC meanwhile has a government mandate to increase its income from commercial sources, as pressure on the licence fee mounts. UKTV last year paid the BBC £27m in dividends and £55m for rights to old programmes.
However, BBC executives are keen to collaborate with ITV and others to build a new British on-demand service to challenge Netflix in a joint venture called “Project Kangaroo 2”.