Conor Dignam on Broadcasting

The battle lines of British broadcasting were redrawn last week when Virgin Media cable customers saw Sky One, Sky News, Sky Sports News and Sky Travel disappear from their TV screens.

It was a move that had been coming for several days as both Sky and Virgin Media - formerly the NTL cable company - fought a very public PR campaign over what Sky wanted from Virgin to carry the channels - and what the cable company was prepared to pay. This is a case of James Murdoch and Sky's media muscle clashing head on with Sir Richard Branson and Virgin's PR machine - and the poor cable customer getting caught in the middle.

Virgin had claimed Sky was looking to double the price it demanded for the cable company to carry its channels - even though viewing of them had dropped 20 per cent in the last three years. Sky meanwhile insisted that it was looking for a 20 per cent rise in prices - and that its channels were well worth that to Virgin.

The move now means that any cable viewers wanting to watch TV premieres of Sky One's popular US imports, including 24, Lost and The Simpsons, have only one choice - switch from cable to Sky satellite subscriptions.

But Virgin Media's 3.3m cable customers don't give a damn about the details of the contractual wrangling between the two media companies - all they care about is that some of their favourite shows have disappeared from the cable platform and are unlikely to come back.

The day after the Sky channels were pulled, online chatboards were buzzing with disgruntled Virgin customers. "I don't care about Virgin's contract negotiations with their supplier, that's their fault," said one. "I'm their customer and I'm now getting a degraded service for the same money as I was paying, half way through seasons such as 24."

Virgin Media's infantile decision to rename Sky News as "Sky Snooze" and Sky Sports News as "Old Sky Sports Snooze" on its screens the day they were pulled, showed how badly it had misjudged the reactions of its own customers. The joke went down like a lead balloon and the "humorous" names were pulled later the same day.

There were withering remarks about the dominance of Rupert Murdoch, the majority shareholder in Sky and his son James Murdoch, Sky's chief executive. But for the Virgin king Sir Richard Branson and Virgin Media's chief executive Steve Burch this has all the makings of a massive PR own goal.

Virgin Media has extended its on-demand service to try to make up for the loss of the Sky channels and shows, but it won't be able to offer the most recent season of US imports, and it looks unlikely to placate unhappy customers.

In fact so furious was the backlash that by Friday last week Virgin said it would let customers cancel their subscription package immediately, after originally stating it would hold them to the full length of their contracts.

Virgin has sought to position itself as the underdog in this battle; the little guy prepared to take on the arrogance of the market leader on behalf of its customers. It's a PR strategy that has worked well in the past, with Virgin Atlantic vs British Airways or Virgin Cola vs Coke and Pepsi. But this time it simply doesn't wash.

The big difference is that in this PR war Virgin's own customers are losing out - getting less choice for the same price. But this is a dispute in which there appear to be no winners, just losers. Sky has said the loss of carriage fees from Virgin - along with advertising revenues - will add up to around £60m in the first year. Sky will have to attract roughly 100,000 of Virgin's customer base (around 3 per cent) to defect to satellite to begin to make up for the lost revenues. That process is already under way with a marketing campaign launched last week offering Virgin customers a way to "Get Jack Back" - a reference to the drama 24 - by switching to Sky for a package starting at £15 a month. So for the immediate future the spat with Virgin has cost Sky revenues, but the final price could be much higher. Sir Richard's anti-Sky PR campaign has also put pressure on the Government over BSkyB's power and influence in British broadcasting.

Last week, at the height of the row, trade secretary Alastair Darling announced he was asking Ofcom to look at whether Sky's acquisition of almost 18 per cent of ITV last year was against the public interest. The move by James Murdoch was at the time seen as an astute way of wrecking a bid for ITV by NTL (before it was rebranded as Virgin).

The worst case scenario would see Sky forced to sell off its stake in ITV at a considerable loss - despite the fact that it is legally entitled to own up to 20 per cent of the broadcaster.

Ofcom will report its conclusion on 27 April, which means Sky won't have long to wait to find out quite how serious this Government intervention is.

So at the moment everyone looks like a loser in the broadcast battle between Virgin and Sky. Virgin and its bearded leader have lost the confidence of their own customers and severely dented their reputation as the consumer's champion. Sky has been cast in the role of broadcasting bully (and it has certainly played that role in the past) at a politically sensitive time for the Murdoch clan. It has also lost 3.3m households for some of its key channels - and the revenues that go with them.

But the biggest losers of all are Virgin's customers. They have lost channels and choice as a result of this row and are now faced with the prospect of switching to Sky or losing some of their favourite programmes. It's an inauspicious beginning for the Virgin brand which arrived in the broadcasting market promising greater customer service and focus. But there may be some winners in this war after all - although not those involved in it. The first is the download and on-demand sites that can offer up-to-date US shows such as The Simpsons. The second is of course Freeview - the non-subscription offering that delivers 30 channels for a single payment, including all the BBC, ITV's and C4's digital offerings.

That may sound nice and simple for customers caught in the middle of the Sky/Virgin war who now don't want to hand their money to either of them - and who could blame them?

ITV's comeback is gathering steam

The standing joke about comedy on ITV1 used to be that there wasn't any. Some suggested that ITV had effectively given up on commissioning new comedy, leaving the field clear for the BBC and Channel 4. But in the first couple of months of this year, ITV1 has broadcast two of the five most watched comedy shows, and both of them were new series.

The debut of sitcom Benidorm pulled in almost six million viewers. ITV's other new comedy series, Bonkers, also launched with 4.9m. Yes it's true that these figures have dipped considerably since then, but all new comedy shows take time to establish themselves. And these are good shows. They may not be faultless, but they have a more contemporary comedy feel to them, and signal that ITV is serious about moving its flagship channel on and bringing a bolder approach to commissioning. ITV's director of television Simon Shaps has already moved to recommission Benidorm.

He has also recommissioned Al Murray's Happy Hour which is one of the best late-night shows on TV at the moment, and the new Saturday night sci-fi family show Primeval which is certainly proving popular with my five-year-old son Joseph and around 5.7m other viewers. Last week ITV1 also served up the comedy-drama Confessions of a Diary Secretary, a risqué and risky commission which was played for laughs and told the story of John Prescott's affair with his diary secretary Tracey Temple, delivering 4m viewers. Not all of these shows are working or paying off as ITV1 would like but all in all, ITV1 has had a good start to the year.

It has shown it is prepared to take risks and stick with shows beyond the first series. It has also shown it can deliver big audiences to new British comedy - in a way that C4 is struggling to do. It may be too early to talk about recovery at ITV1 but it's certainly fair to say that there are signs of green shoots. Let's see if they come through.