Media Analysis: Pay-TV Brawl Enters Next Round

Article excerpt

Virgin Media's bitter feud with Sky shows little sign of abating and could take its toll on both brands.

When Virgin Media launched in February, few would have predicted the entrant to the pay-TV market would find itself locked in an acrimonious public battle with BSkyB over carriage fees.

The dispute centres on fees for Sky's basic channels: Sky One, Two, Three, News and Sports News. Sky pulled the channels from Virgin after talks broke down in February. Virgin, which accuses Sky of abusing its dominant position, has taken the case to court and it is likely to drag on for at least another year.

The feud has been marked by a barrage of tit-for-tat ad activity, which has arguably created the most entertaining media conflict of the year. Since Virgin Media's debut, the two firms have spent a combined sum of almost pounds 92m on promotional activity; Sky spent nearly pounds 60m between 1 February and 30 June, while Virgin has invested pounds 32m, according to Nielsen Media Research.

But rather than strengthening the position of the two, these campaigns may actually have confused customers and eroded the Virgin Media brand.

Sky's most recent ad campaign cites its rival's tie-up with Setanta Sports, urging consumers 'not to score an own goal with Virgin Media's new offer'. Setanta Sports is to provide free sports content to Virgin's premium-package customers as well as a stand-alone football-news channel - a joint venture that is also expected to launch on Freeview. This latest tranche of ads follows the unprecedented decision by both companies to publish open letters airing their grievances.

Damaging effects

Industry insiders suggest that neither brand expected the row to go on for so long or to be played out in such a public fashion. Moreover, neither of them is benefiting from it, according to Chris Hayward, head of investment at ZenithOptimedia. 'There is a strong possibility that these campaigns are causing confusion among consumers and the increasingly aggressive approach is bound to have a negative impact,' he says.

Ivan Pollard, partner at media agency Naked Communications believes that this form of direct comparison-based advertising is traditionally the refuge of the unimaginative. 'It doesn't create any emotional engagement among consumers - or make them favour one brand over the other,' he says.

Not surprisingly, Virgin and Sky are each blaming the other for the spat, which, as the dispute over carriage fees continues, shows no sign of an imminent conclusion.

'If the sole point of your ad is to kick the shit out of the competition, then it is confusing,' says James Kydd, managing director of marketing at Virgin Media, says. He adds that consumers are 'bored rigid' by brands going head to head. 'Sky has invested a huge amount in press ads designed to knock Virgin, but we haven't increased our spend,' he says. …