Virgin Media hit by shopping slump

The appetite of viewers for watching their favourite shows when they want helped lift by 50 per cent hits at Virgin Media's on demand service last year.

Virgin Media posted a wider quarterly loss of £50 million after it slashed the balance sheet value of its home shopping business.

The cable company said the write down of £54.8 million at Sit-up, which trades as bid tv, price-drop tv and speed auction tv, reflected the impact of the consumer downturn and the loss of one of its two Freeview channels.

At Virgin Media's core business, net customer additions of 14,800 in the final three months of the year were down from more than 24,000 a year earlier. It sold 185,000 contracts for broadband, television, telephony or mobile phone services during the period, down from 272,100 in the same period of 2007.

However, the company said it was encouraged by a further increase in average revenues per user - to £42.30 - and a reduction in churn to 1.2 per cent. The rate at which customers leave the service was 1.4 per cent in 2007.

Group operating losses following the Sit-up write-down were £50.2 million compared with £17.8 million a year earlier, Virgin Media said.

However, chief executive Neil Berkett added: "Record numbers of customers are now using Virgin Media's services, despite the current economic environment."

He described the customer response to the recent launch of 50Mb broadband as encouraging and said the company had also strengthened its position in the video-on-demand and catch-up TV markets. "Over the course of 2008 we received more than half a billion views as on-demand TV came of age," Mr Berkett said.

Virgin said its total number of broadband additions stood at 57,100 in the final quarter of this year, compared with 68,700 in the previous quarter. It said this reflected slower growth in the market as a whole and its own focus on higher revenue services offering faster broadband speeds.

The company reported 3.68 million broadband customers at the end of the period. It also added 44,500 television customers, leaving it with a total of 3.62 million at the end of the year.

Virgin is reportedly expected to decide later this week whether to sell its broadcast division, which includes 50 per cent of its UKTV joint venture with the BBC.