Can brand Branson bail out cable TV?
NTL will promise vastly improved service when it relaunches as Virgin Media this week. But when the marketing stardust wears off, will subscriptions endure?
Cahal Milmo is the chief reporter of The Independent and has been with the paper since 2000. He was born in London and previously worked at the Press Association news agency. He has reported on assignment at home and abroad, including Rwanda, Sudan and Burkina Faso, the phone hacking scandal and the London Olympics. In his spare time he is a keen runner and cyclist, and keeps an allotment.
Sunday 04 February 2007
A strange symbol is going to appear on millions of TV screens across the country on Thursday. To the uninitiated, it resembles a fat-bottomed number eight that has fallen on its side. But the abstract squiggle is the logo for Virgin Media, the new name for NTL, the troubled cable company.
"It looks like a Pringle crisp," one unimpressed TV industry executive told The Independent on Sunday.
But in marketing parlance, the logo, the brainchild of creative agency Start, is supposed to represent a "continuous communications loop" and encapsulate the concepts of "light" and "infinity".
But historically, the nearest NTL customers have got to experiencing infinity is waiting on hold to speak to a human being at one of the company's call centres.
NTL's fortunes have been hamstrung by poor customer service and a lack of financial resources to invest in new technology. As a result it has struggled to keep up with Sky, which has continued to grab a larger slice of the pay-TV market at NTL's expense.
But this week Sir Richard Branson, the head of Virgin Group and the largest shareholder in Virgin Media (which was formed when Sir Richard's Virgin Mobile was acquired by NTL last year) will signal a new start for cable TV in the UK.
As is the custom with new Virgin companies, the launch party on Thursday at a venue in London's West End will inevitably involve dozens of scantily clad models and a plethora of celebrities (Al Gore and Kill Bill star Uma Thurman are among those expected to be in attendance). Sir Richard will no doubt make a grand entrance by parachute and grab the nearest of the aforementioned models to ensure the newspapers get a good picture for the morning editions.
A TV advertising campaign fronted by Thurman - the centrepiece of a £20m marketing push - will then tell the country about the wonders of Virgin Media. But it will take more than clever advertising and a name change to turn around NTL, and many analysts doubt whether Virgin's magic marketing dust will be enough to transform a troubled group.
Since 2004, cable companies have only signed up 3 per cent of the UK households that have switched to multi-channel digital TV services from analogue. Sky has attracted 17 per cent, while Freeview has gobbled up the remaining 80 per cent, according to figures from Ofcom, the media watchdog.
Last week, Sky said 11.9 per cent of its had customers defected to one of its rivals over the past year, but that figure is still about half the churn suffered by NTL. Cable's share of the pay-TV market, which excludes Freeview, has also shrunk relative to Sky.
And last year Rupert Murdoch's company upped the stakes by offering high-speed broadband internet to its customers - previously a service that only cable TV or telecoms companies could supply to households. Sky is on target to sign up 700,000 broadband subscribers by June.
Sky also offers cheaper packages, claiming that an NTL customer who subscribes to a typical package of pay-TV, broadband and fixed-line phone services would save £136 in the first year after switching to Sky and £288 in the next year, although NTL disputes the figures.
Jeremy Darroch, chief financial officer at Sky, says the satellite broadcaster is not worried about NTL's rebranding: "You can change the name of the company but you have to look under the bonnet. At the end of the day, customers are concerned about price, service and product."
He adds that NTL has "deep- rooted" problems in its cable network that no amount of Virgin marketing magic can resolve.
NTL was born from the amalgamation of several smaller cable companies and, to this day, it is still stitching together its network so it can offer the widest possible range of services to all its customers.
But James Kydd, managing director of marketing for Virgin Media, says the cable group has left its network problems behind. "If Virgin Media was just about putting a lick of paint on the old NTL," he explains, "then we would have launched the new company last July.
"Since the acquisition [of Virgin Mobile by NTL], everything has changed," he continues. "The billing system has been overhauled, which will enable our customer service representatives to do their jobs properly.
"Historically, the old NTL was all about making acquisitions. Spending on everything else was frozen. We have spent nine months changing that"
Mr Kydd adds that it is the little things, as well as big operational changes, that have been addressed.
"One of the first things we did was to make sure all the call centre staff had chairs that weren't ripped. An awful lot of effort has gone into making sure the basic things have been sorted.
"And we have spent £5m on making sure there are enough staff to answer phones. Previously, the view was that it didn't matter if it took 30 minutes for a customer to get through."
As well as the improvements to the call centres, Virgin Media will this week launch a raft of new services, including at least one new channel. A new digital video recorder called V+, compatible with high-definition, will be introduced that will have greater memory than Sky's equivalent Sky+ box.
And there is also the prospect of a new "BBC on demand" channel for Virgin Media. The BBC Trust has given its provisional approval for the roll out of the BBC iPlayer, which will enable consumers to download any programme broadcast in the preceding weeks. Mr Kydd confirms that Virgin Media is holding talks with the corporation to discuss whether the iPlayer technology could be incorporated to create a new channel on cable.
The launch is like giving birth to a baby,' says Mr Kydd. "We can't wait to get cracking."
Trains, planes and mobiles: Virgin keeps moving
Sir Richard Branson's ambition seems to be limitless. His empire of Virgin Group companies now stretches from healthcare to entertainment to space flight.
Last week he announced the creation of Virgin Health Bank, a company that offers parents the chance to store the umbilical blood stem cells from their new-born babies in the hope that they can be used in the future to cure illnesses.
Virgin Galactic is soon to fly its very wealthy customers into beyond the atmosphere in a "spaceship", and Sir Richard also has transport companies closer to the ground in the form of the Virgin Atlantic and Virgin Blue airlines and Virgin Trains in the UK.
There is also Virgin Books, Virgin Music, Virgin Active gyms and Virgin Mobile, which is now part of Virgin Media.
Sir Richard's Virgin Group has also founded a $400m (£203m) investment fund to pump money into green energy initiatives.
Should Con Coughlin not already have enough enemies, The Daily Telegraph's foreign editor has now become the target of Campaign Iran, a group that has taken exception to his coverage of the country. The group has compiled a dossier of supposedly "inaccurate and misleading stories" written by him and claims to have sent it to the Press Complaints Commission. The dossier is also doing the rounds on email, indeed gleefully passing through the in-boxes of many former Telegraph correspondents. The PCC confirms that it has received four related complaints about his article on North Korea helping Iran with nuclear testing, printed on 24 January. However, the PCC has yet to receive the actual dossier, which cites 16 examples dating back to October 2005 and questions Coughlin's use of "unnamed Western intelligence officers" as sources. That Coughlin, currently indulging in some sun in the Bahamas, will take these charges seriously is doubtful: the dossier incorrectly titles Coughlin as Telegraph "political editor".
Crick as himself
Having told its reporters to reapply for their jobs, BBC's Newsnight might be surprised to find some of them moonlighting during this period of uncertainty. That lippy political hack Michael Crick appears in a cameo role in ITV's coming film satire about John Prescott, Confessions Of A Diary Secretary. Crick has landed himself the role of, er, himself and is seen running after Tracey Temple (in a purely journalistic sense) shouting questions in a very Crick-like manner. Give that man his real job back, please.
New style, familiar face
As if the world did not have enough glossy style publications, here comes another. Ashley Heath, former editorial director of The Face, is starting up a new magazine called Felix. Also involved in the top-secret project is Avril Mair, ex i-D editor. "It's a quite adventurous project - and not a style magazine as you would assume it to be," says Heath, who achieved fame for his 10- year relationship with Texas singer Sharleen Spiteri, as well his work at Emap. There no launch date announced as yet.
New deal for Edmonds?
Spotted hanging around Marylebone, one permatanned Noel Edmonds. The Deal or No Deal host was seen leaving the headquarters of UBC Media Group in Lisson Street, a company at which he used to be a non-executive director. Edmonds quit the post - though retained a fat tranche of shares in the digital radio company - a year ago when Channel 4 signed him for £3m to present the hit game show for 18 months. Is it time for him to cash in the rest of them?
Rupert Murdoch won't be so pleased about Manchester getting the super-casino. His News Corporation has a 10 per cent stake in the Greenwich Dome, the site in which Colorado mogul Philip Anschutz, cowboy buddy of John Prescott, is heavily invested through his company AEG. Perhaps Murdoch's lobbyist son-in-law Matthew Freud doesn't have quite as much sway as it would seem.
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