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overview
landmarks
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overview
This page looks at UK cable television
operator Virgin Media and its predecessors ntl and Telewest.
It covers -
introduction
The UK cable television market is dominated by Virgin
Media, a group that combined ntl and Telewest (joined
through a £3.3bn merger in 2005) and Virgin Mobile
(acquired through ntl's £817m takeover of the Branson-controlled
telecommunications company in 2006)
Telewest and ntl expanded aggressively during the late
1990s, competing with free-to-air (eg the BBC,
Granada and Carlton)
and satellite/microwave (eg Murdoch-controlled
BSkyB) television and traditional connectivity providers
such as BT (the UK counterpart of Australia's Telstra).
They secured major investments, notably from Liberty
and its affiliates - as part of the TCI/Liberty push to
dominate the European cable television market - and from
Microsoft. However, rollout
of infrastructure and buying market share resulted in
recurrent large losses.
That proved unsupportable after the dotcom and telco crash.
Both groups were restructured from 2002 onwards, effectively
wiping out the equity of existing shareholders.
ntl
As of 2005 ntl was the UK's largest cable television operator
and a leading provider of broadband and communications
services. It had over 3.3 million residential telephone,
subscription television and internet customers (a third
of them broadband subscribers), as well as providing wholesale
internet access solutions to ISPs in the UK.
NTL was founded as International CableTel by Barclay Knapp
and George Blumenthal with US$25m from the US$2.8 billion
sale to Airtouch of mobile phone operator Cellular Communications.
It acquired National Transcommunications Ltd, the privatised
national transmission business for the former Independent
Broadcasting Authority (IBA), thus gaining responsibility
for distributing ITV, Channel 4 and Channel 5 television
signals via 1,500 broadcast towers in the UK. That operation,
later expanded through acquisition of ntl in Australia,
was unloaded in 2004 to a consortium led by Macquarie
Communications Infrastructure Group (MCG) for £1.27
billion.
The ntl corporate site is here.
TeleWest
As of 2005 Telewest passed and marketed to 4.7 million
homes. At that time it provided multi-channel television,
telephone and internet services to 1.8 million residential
customers and 3.87 million revenue generating units. Telewest
Business, its business division, supplied broadband communications
to public and private sector markets.
Flextech, Telewest's content division, had 5 wholly owned
pay television channels and one free-to-air channel. Flextech
was also the BBC's partner in UKTV.
Together they were the largest supplier of basic channels
to the UK pay television market with a portfolio that
combined wholly owned and managed channels, including
the ten UKTV Channels.
The Telewest corporate site is here.
Branson and Virgin
Branson launched his first foray into television as long
ago as 1984, when his Virgin Vision subsidiary launched
24-hour satellite service The Music Channel.
Richard Branson: Very charming... but he looks at you
like a shark looks at his dinner. The pound signs are
going round and round in his eyes..
His unorthodox but successful hokey-cokey approach to
business in other sectors, of selling off and moving on
to the next launch, has also been in evidence in Branson's
TV ventures - The Music Channel was sold to ITV in 1987.
His most sustained effort to book a seat at the top table
of the British TV establishment came in the 90s, when
he joined consortia bidding for ITV and Five licences.
In the 1992 ITV franchise auction he teamed up with Sir
David Frost to form CPV-TV, which bid unsuccessfully for
three regional licences - including the lucrative London
weekday concession, then run by Thames Television.
Thames lost its licence to Michael Green's Carlton. CPV-TV
actually put in a higher bid than Carlton but was ruled
out on inferior programming quality.
Three years later Branson was back knocking on the TV
regulators' door as part of a consortium with Associated
Newspapers, Paramount and Phillips bidding for the Five
licence.
In October 1995 this was awarded to a rival bid backed
by Pearson and Clive Hollick. The bid Branson backed was
once again blackballed over programming quality.
Branson and other unsuccessful bidders later failed in
an attempt to get the regulators' decision overturned
at a high vourt judicial review.
Over the past 20 years Branson has dabbled across the
range of TV businesses.
In 1987 Virgin was part of the British Satellite Broadcasting
consortium that won the right to launch five channels
in the autumn of 1989. Virgin's BSB stake was sold the
following year, at a profit - in hindsight a canny move,
given that BSB quickly came unstuck after it launched
in 1989, merging with Rupert Murdoch's rival satellite
broadcaster Sky to form BSkyB.
Branson's company was active in the post production industry
for more than a decade, after setting up special effects,
graphics and video editing outfit 525 in Los Angeles in
1987. The same year, Virgin bought London-based post production
house Rushes.
Virgin eventually got out of the post production business
in May 2000, selling its Virgin Digital Studios subsidiary
to US facilities company 4MC for around £26m.
The company has also had a presence in independent TV
production, including a 50% stake in Rapido, the firm
behind Eurotrash, which was sold in March last year.
In 1992 Thorn EMI bought the Virgin Music Group from Richard
Branson and Japanese conglomerate
Fujisankei for £560m.
Tom Bower sniffed in 2007 that
Challenging Goliaths has always been Richard Branson's
formula to increase his fortune. Protesting loudly about
unfairness while stepping hard on the toes of established
businessmen has richly rewarded Britain's favourite
tycoon. Whatever the business - airlines, music, Virgin
Cola, the lottery or financial services - Branson always
poses as the people's champion against profiteers. But
eventually his true motive surfaces. He single-mindedly
pursues self-interest to increase his own wealth. His
latest onslaught against Sky is no different than dozens
of previous battles, except that Branson v Murdoch promises
more bloodshed than usual and a painful finale.
studies
There has been no major study of Telewest or ntl.
For insights about the cable television industry and TCI
see works highlighted in the Liberty
profile elsewhere on this site.
Branson has been the subject of several studies, which
have tended to concentrate on the sizzle rather than the
substance. Works include Virgin King: Inside Richard
Branson's Business Empire (New York: HarperCollins
1994) by Tim Jackson, Tom Bower's Branson (London:
Fourth Estate 2000), the less reverential Richard
Branson (London: Michael Joseph 1988) by Mick Brown,
Dogfight: The Smearing of Richard Branson: British Airways
Secret War Against Virgin (London: Little Brown 1994)
by Martyn Gregory, Virgin Global Challenger: The Inside
Story of Richard Branson and Per Lindstrand's Dramatic
Non-Stop Round the World Balloon Flight (London:
Virgin 1999) by Rupert Saunders, Richard Branson:
The Inside Story (London: Trafalgar Square 1998)
by Nick Brown and Virgin: A History of Virgin Records
(Welcome Rain 1995) by Terry Southern.
Losing My Virginity: How I've Survived, Had Fun, and Made
a Fortune Doing Business My Way (London: Virgin 2002),
How to Get Ahead in Business (London: Virgin
1995) and Screw It, Let's Do It: Lessons in Life
(London: Virgin 2006) by Richard Branson are characteristically
upbeat. We were unimpressed by Des Dearlove's triumphalist
Business the Richard Branson Way: 10 Secrets of the
World's Greatest Brand Builder (New York: Wiley 2002)
.
 next
page (Virgin Media and ntl chronology)
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