Virgin Media yesterday said that it has lost nearly 50,000 customers this year and expects to lose more as its high-profile row with BSkyB begins to have an impact.

Despite spending £25 million on rebranding, the cable group suffered a 46,900 fall in customers to 4.8 million in the first quarter.

Steve Burch, chief executive of Virgin Media, cautioned that there would be further falls in customer numbers over the next quarter as the result of the row with BSkyB, its pay-TV rival, which is 39.1 per cent owned by News Corporation, parent company of The Times.

Sky and Virgin are embroiled in a dispute over how much the cable group should pay to carry Sky’s basic channels, with each side blaming the other for a breakdown in negotiations. Sky’s basic channels have been removed from the Virgin platform. Virgin has taken legal action in the High Court, accusing Sky of anticompetitive behaviour.

Mr Burch said: “Any company that takes channels off the air is going to take a hit, but if you look at the cost of what they were asking and the competitive issues, it’s really the only decision we could make.

“We’re not being cavalier about it, but we’re comfortable that we made the right decision for the business and we believe that in the long term we made the right decision for the customer.”

The warning about a further slide in customers, combined with the poor first-quarter subscriber figures, sent Virgin Media’s shares on Nasdaq down by as much as 5 per cent in early trading.

One analyst, who declined to be named, said yesterday that continued poor subscriber figures could make a fresh approach from private equity players likely. An approach now “made a lot of sense”, he said.

NTL, the cable group that merged with Sir Richard Branson’s Virgin Mobile to form Virgin Media, was twice targeted by private equity players. The merger was supposed to transform the group, which was plagued by a reputation for poor customer service, into a major media and communications player.

The new entity was marketed as Britain’s first “quadruple play” provider of broadband, television, phone and mobile services.

But in the quarter to the end of March, Virgin swung to an operating loss of £15.3 million.

The group suffered a haemorrhaging of telephony customers. Mr Burch blamed continued pressure from the “free” offerings launched by Carphone Warehouse and BskyB. He hopes refreshed tariffs and “bundles” will help the company to recover.

He conceded that Virgin’s heavy focus on broadband and television over the past year had led it to take its “eye off the ball” in the fixed-line telephony market.

In contrast, Sky’s recent success in winning a higher than expected number of new subscribers was in part attributed to its spat with Virgin.

Virgin insisted that the rest of its television content would make it a key player in the sector, even without Sky’s offering.

Karen Darby, founder of the price comparison service SimplySwitch.com, said: “Despite spending £25 million on a high-profile marketing campaign, Virgin Media hasn’t got off to a flying start.”

Mr Burch said that the decision not to agree to the cost and contract terms of renewal for the Sky basic channels would be better for the business in the long run.

Virgin numbers

3.39m total TV subscribers
87,900 broadband subscribers added in first quarter
63,400 first-quarter fall in telephone customers
46,900 net loss of subscribers

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