Virgin Media Gains 50,000 Pre-Registrations for TiVo

Virgin Media gained 50,000 pre-registrations for TiVo’s DVR service in advance of a Q2 commercial rollout as the cable company builds on a year-old partnership, Virgin executives told analysts Thursday. The U.K. cable operator will spend an incremental $64.6 million in the second half on capital projects related to mobile and TiVo-related businesses, but will keep overall capital costs at 15-17 percent of total revenue, Chief Financial Officer Eamonn O'Hare said. “There will be an increase in capital expense related to TiVo, but that funding will be provided by doing less in other areas."

About 500,000 of Virgin Media’s 4.8 million cable customers have TiVo-ready HD boxes that can interface with, but lack the hard drive for, the DVR, company officials have said (CED Dec 6 p3). Virgin is replacing Liberate middleware and Seachange video-on-demand software with TiVo at no additional charge. The TiVo XL box, with a 1 terabyte hard drive, costs $313, with a $41 monthly fee and $63 for installation. In addition to the home service, Virgin also will have a TiVo application available in the second half for iPad, CEO Neil Berkett said. Virgin’s on-demand cable service, which is being upgraded to TiVo, is being used by 64 percent of its subscribers.

To accommodate TiVo, the HD/DVR is being given a separate cable modem and connection, Virgin has said. It’s being allocated about 10 Mbps to avoid competing with a home’s broadband service for bandwidth. Virgin partitioned portions of its 750 MHz spectrum for TiVo using a method that allows a 55 Mbps broadband service to have 44 Mbps download speeds. About 118,000 Virgin customers have 50 Mbps service, while another 662,000 have 20 Mbps service, the company said. It unveiled a new 30 Mbps tier this month to replace the 20 Mbps service for new customers.

TiVo will roll out as Virgin moves to increase the speeds of its broadband service. A service with 100 Mbps download speeds began in December and is available to 356,000 homes near London, with a goal of passing 13 million homes by year-end, Berkett said. Virgin also is in trials with 200 Mbps, and equipment for the 100 Mbps service can handle speeds up to 400 Mbps, company executives have said. It gained 44,100 net new subscribers in Q4 to end the year with 4.29 million, the company said.

Virgin’s cable business added 17,100 net cable subscribers in Q4, down from 28,600 a year ago to end the year with 4.8 million customers. Cable revenue rose 6.7 percent to $1.1 billion as the business’ average revenue per user (ARPU) increased 1.6 percent to $76.82. The average monthly churn increased to 1.3 percent from 1.2 percent. The downturn in cable additions came as more Virgin customers chose higher tiers of service, Berkett said. Virgin had 1.5 million HD customers, including 780,000 who subscribed to a Sky Premium service, he said. Virgin is gaining higher-tier customers, but losing some that signed on during a promotion in 2006-2007 that offered free TV service with a subscription to a bundled broadband/telephony package, Berkett said. “We have been partially successful in migrating some of those customers” to an upper tier, and the company expects to have “modest” subscriber growth as ARPU increases, he said. Virgin’s digital cable customers grew to 3.75 million from 3.65 million a year ago, while those with analog service shrank to 19,200 from 37,700, the company said.

Virgin had just over 3 million triple-play customers at quarter’s end, up from 2.88 million a year ago, accounting for 63 percent of total subscribers, the company said. Average revenue per user for triple play customers is about $81. Quad play customers -- those getting cable, broadband, mobile and video services -- were 11.8 percent of total subscribers, up from 10 percent a year ago, the company said. Quad play ARPU is about $130.

The mobile business added 56,100 subscribers in Q4, down from 77,100 a year earlier. The number of Virgin mobile subscribers rose to 1.2 million from 949,700 a year ago. Wireless revenue rose to $239.8 million from $232 million. In Virgin’s business segment, which includes data and wholesale revenue, sales increased 4.7 percent to $245.7 million. Retail data revenue jumped 9.3 percent to $100.9 million.

Overall, Virgin swung to a $5.9 million Q4 profit from a $152.6 million loss a year earlier as revenue rose to $1.62 billion from $1.52 billion. Virgin’s share of the profit in its UKTV joint venture with BBC Worldwide shrank to $4.2 million from $36.8 million. Virgin is trying to sell a stake in Scripps valued at $580 million that includes loans totaling $194 million.