The deal does not include the licensing of the Virgin brand and Sky will rename the Virgin1 channel in the coming months.
The move comes two months after Virgin Media TV brand and marketing director Jeff Dodds stepped down from his role to become Virgin Media director of internal communications and engagement. It is unclear how the rest of the Virgin Media TV marketing team will be affected.
Sky says the acquisition will expand its portfolio of basic pay TV channels and eliminate the carriage fees it currently pays for distributing VMtv channels on its TV services.
The satellite company will assume responsibility for selling advertising for the newly acquired VMtv channels from January 2011 and new carriage agreements will secure wholesale distribution of Sky’s basic channel line-up, including Sky1 and Sky Arts, and the newly acquired VMtv channels, on Virgin Media’s cable TV service.
In return Virgin Media customers will, for the first time, have the option of recieving any of Sky’s basic HD channels, Sky Sports HD 1 and Sky Sports HD 2, and all Sky Movies HD channels.
Virgin Media will also make available through its on-demand TV service a range of content from Sky’s basic and premium channels, including the newly acquired VMtv channels. This will include access to red button interactive sports coverage and the opportunity to deliver selected standard definition programming over the internet.
Completion of the agreements is conditional on obtaining merger control clearance in the Republic of Ireland.
Jeremy Darroch, ceo, BSkyB, says: “VMtv is an attractive investment opportunity which complements our existing content business and delivers strategic and financial benefits. We are pleased that, through commercial negotiation, we have been able to ensure wide distribution of our channels to a growing pay TV universe.”
Neil Berkett, ceo, Virgin Media, adds: “The sale of our channels business has generated substantial value. Together with the new commercial agreements we’ve announced today, it will allow us to focus more closely on our strategy of exploiting Virgin Media’s super-fast connectivity to offer our customers a range of the very best content through a highly versatile next generation entertainment application.”