Virgin shows it wants to be big TV player with €10m capture of UTV Ireland
Published 12/07/2016 | 02:30
Buying UTV Ireland for €10m makes Virgin an increasingly important player in Ireland's broadcasting industry. But why does a broadband delivery company want to buy TV stations?
The answer is that it needs something new to compete with Sky and reverse a recent set of market declines, particularly in its Irish TV subscription figures.
In a nutshell, Virgin (formerly UPC) lost 14pc of its Irish TV subscribers last year and 8pc of its total customer base. Its broadband service, which has dominated subscriptions in the urban areas where it is available, has now also plateaued.
Meanwhile, its biggest rival, Sky, has seen virtually no fall-off in its estimated 700,000 TV subscribers while recording strong growth in its broadband business. Sky's formula for driving subscriptions is widely acknowledged to be its huge investment in programming content. It has retained customers by buying premium content rights.
So Virgin's parent company, Liberty Global, wants to do the same.
"The danger for a company like Virgin Media or Liberty Global is to be shut out of content," Virgin Media boss Tony Hanway told the Irish Independent earlier this year.
"Content prices are going up all the time. It therefore makes a lot of sense for us to start dipping a toe in the water of owning the content assets and understanding how they're created.
"That gives you a front-row seat so that you're not out there in a Dutch auction, bidding for ever more expensive content. This way you've got a share of the pie."
This is the reason that Virgin bought TV3 last year in an €87m deal.
It is also the reason why another rival, Eir, recently bought Setanta Sports. Last week, Eir rebranded Setanta and announced that its premium licensed BT Sport football and rugby programming will now be accessible to any Eir broadband customers.
As for the future of UTV Ireland as a standalone entity? It could conceivably shut UTV Ireland and integrate the station's programming jewels - principally 'Coronation Street' - into the bigger, more successful TV3.
As part of the UTV Ireland acquisition, Virgin secured "a comprehensive 10-year output deal for Ireland for ITV-produced programming" - meaning shows such as 'Coronation Street', 'Emmerdale' and 'Britain's Got Talent'.
However, while the company isn't ruling out some sort of amalgamation between TV3 and UTV Ireland, it says that the acquisition of the smaller station "will be an essential step towards securing the channel's long-term future".
Company executives won't say any more than that, insisting that it is "too early" to talk about strategy ahead of a Competition Authority inspection into the proposed deal.
Virgin Media may not be finished spending yet.