Friday, 12 May 2017

Business Insider UK: ITV could disappear from Virgin Media unless a £40 million disagreement is resolved

Story from Business Insider UK:

There's a danger ITV could disappear from Virgin Media unless the cable TV company pays it tens of millions of pounds.


That was the thinly veiled threat made by ITV chief executive Adam Crozier this week, as his firm prepares to negotiate a deal to keep its channels on Virgin TV platforms, including TiVo and V6.

ITV is able to demand payment after the introduction of the Digital Economy Act last month.

The legislation abolished a copyright exemption cable TV platforms like Virgin had enjoyed since 1988.

The old law let Virgin carry ITV for its 3.7 million subscribers without paying ITV a penny.

ITV is home to shows such as Simon Cowell's "Britain's Got Talent" and "Coronation Street."

"It's using our copyright without paying for it," Crozier told the Media Summit on Thursday, a conference in London organised by publishing business MBI.

"The simple point about the [change in the] law is, they won’t be able to run our channels without our permission."

ITV will now negotiate new terms with Virgin Media.

Virgin does currently pay for ITV's smaller sister channels, including ITV2 and ITVBe, but a source close to the talks said this deal expires in September.

It paves the way for ITV to strike a new agreement, under which it will demand payment for its flagship station.

The technical term for this is a "retransmission fee" — and it could be worth more than £40 million to ITV, according to a Liberum analyst note circulated this week.

A source close to ITV and Virgin's talks did not guide us away from this figure.

Virgin is extremely reluctant to foot such a bill, however.

It thinks the ad revenue ITV makes from being guaranteed a prominent position in the TV guide (channel 3 in ITV's case) is compensation enough.

A Virgin spokesman said:
"Culture Secretary Karen Bradley and Digital Minister Matthew Hancock have repeatedly told Parliament they do not want the public service television companies to force Virgin Media to charge free-to-air television viewers to watch ITV, Channel 4 and Channel 5. Virgin Media has confidence the government will ensure public service free channels continue to be free."


In a submission to the Digital Economy Public Bill Committee last year, it said ITV's plan to seek retransmission fees is "concerning" and means the channel could "go dark" on the platform.

Virgin said evidence in America, where retransmission fee disputes are common, suggests "broadcasters use withdrawal of their channel as a key bargaining tool."

Such a dispute erupted in the UK only this year.

Discovery threatened to remove its channels from Sky, claiming the pay-TV company was not prepared to pay "fair price" to carry the stations.

The matter was only resolved in an eleventh-hour deal between the two companies.

But Crozier is positive that the disagreement with Virgin will not escalate to this level.

"You don't go into this thinking it's going to fail. There's no reason we can't reach a sensible agreement on this," he explained at the Media Summit, adding that ITV and Virgin already have a good relationship.

Indeed, Virgin's parent company Liberty Global owns nearly 10% of ITV.

The BBC, Channel 4, and Channel 5 could also ask Virgin for payment to carry their main channels, but have not been as vocal about the issue as ITV.

If disputes arise, UK media regulator Ofcom could step in to provide resolution.


© 2017 Business Insider Inc.