UPDATE 1-BSkyB to pay 160 mln stg for Virgin basic channels

* BSkyB to buy channels including Living, Bravo, Virgin1

* Two sides agree terms for wholesale distribution

(Adds details, quote)

LONDON, June 4 (BestGrowthStock) – Pay-TV firm BSkyB (BSY.L: ) has
agreed to buy Virgin Media’s (VMED.O: ) basic channels as the two
former fierce rivals develop strategies to compete with the
soon-to-arrive free Internet-connected TV services.

The satellite group BSkyB will pay up to 160 million pounds
in cash to expand its portfolio of basic pay TV channels, which
will include Living, Bravo and Virgin1. It will also assume
responsibility for selling advertising around the channels from
2011.

Virgin Media, which has pursued a strategy of providing
access to content through its superfast technology instead of
owning it, has also agreed a deal that allows it access to Sky’s
basic channels, including the ones it has just sold.

Sky and Virgin have previously clashed over the rates they
paid each other for access to channels, which was resolved in
late 2008.

As part of the deal, Virgin Media will also pay an
incremental wholesale fee to show any of Sky’s basic, sports and
movie channels in high definition.

“VMtv is an attractive investment opportunity which
complements our existing content business and delivers strategic
and financial benefits,” BSkyB Chief Executive Jeremy Darroch
said in a joint statement.

Both BSkyB and Virgin Media compete with the Freeview
digital television service which offers numerous channels for
free and has grown strongly in recent years.

It is also expected to be boosted from next year when it
offers a multi-channel platform with access to the Internet and
on-demand viewing.

Stock Market Today

(Reporting by Kate Holton, editing by Will Waterman)

UPDATE 1-BSkyB to pay 160 mln stg for Virgin basic channels