SETTLING into his seat on the Virgin Atlantic flight from London to Sydney last Tuesday, Sir Richard Branson contemplated one of the most audacious deals of his career.

The previous weekend he had told Tom Alexander, chief executive of Virgin Mobile, that he intended to combine the mobile-phone group with NTL, the British cable-television operator.

Together, the companies would offer a “quadruple-play” package of services — television, broadband, fixed-line telephony and mobile telephony. They would pose a new challenge to BT and BSkyB.

In addition, the Virgin brand would replace the NTL brand, resolving one of the problems that has long dogged Simon Duffy, NTL’s chief executive — the lack of slick marketing in a cut-throat marketplace.

The terms of the deal have still to be agreed with Virgin Mobile’s minority shareholders, who hold 28% against Branson’s 72% stake. But the move was both bold and unexpected. And it was just one of several announcements last week that underlined how the divisions between “old media” are being knocked down.

BT announced partnerships with several media groups, including the BBC and Warner Music, to allow consumers to download content from a new recording device that it is developing.

In New York, Jeremy Darroch, finance director of BSkyB, which is 37.2% owned by News Corporation, parent company of The Sunday Times, outlined plans for an internet-based telephony service to be launched next year.

“These three announcements underline again how fast the media landscape is changing,” said one investment banker this weekend. “And not everybody is going to win.”

A deal with Virgin could still leave NTL among the losers. The company is already merging with Telewest, its fellow cable-television operator. That deal is expected to get regulatory approval by the spring, but analysts believe the integration of the two firms’ customer- service operations — a traditional Achilles heel in the sector — could lose as many customers as it attracts.

Claire Enders, managing director of the industry research house Enders Analysis, said: “When seen as a move by NTL to secure the Virgin brand and a high-growth well-run mobile subsidiary, the deal makes sense. But the value of the quadruple play is much more dubious. We cannot see this as a competitive advantage.”

NTL has already had a failure in mobile phones. Four years ago the company struck a deal with Orange to launch a mobile service. It flopped and the partnership was quietly axed.

Ian Livingston, chief executive of BT Retail, agrees that triple or quadruple play has yet to be proved. “There is no point (in bundling services) unless yours is better or cheaper,” he said.

“A lot of nonsense is talked about this. What you have to ask is how does (bundling) make your customers’ lives better or simpler.”

The cable-television industry also has a patchy record on integrating acquisitions. With NTL having to digest Telewest, buying Virgin Mobile could prove to be a case of biting off more than it can chew.

And despite claims that the combined group will have 9m customers, the analysis firm New Street Research suggested last week that many Virgin Mobile customers would not be upgrading to the broader package of NTL services.

“The Virgin Mobile business has a weaker outlook than its brand would suggest,” said a New Street report. “Virgin attracts the lowest-quality users in the wireless market ... and many of its users have low disposable incomes and will not be making television or broadband decisions, let alone quadruple play decisions.”

BSkyB, meanwhile, has privately dismissed talk of a counter-bid for Virgin Mobile. Its recent acquisition of Easynet, the broadband operator, gives it access to an important new market, and it is rumoured to be in talks with Vodafone about the launch of a Sky-branded mobile-phone service.

“We don’t feel the need to develop a separate mobile revenue stream,” said Darroch last week. “It’s something we will watch, but we think that, with the acquisition of Easynet, we have an infrastructure that’s going to allow us to launch a compelling range of products and services." Some analysyts have already played down the prospect that cable will be a serious threat to BSkyB when the rights to live Premiership football are awarded next year.

One person close to the company said: “If Sky retains the lion’s share of the football rights, that’s by far the most important thing in retaining customers over the next three years.”

This does not mean, however, that BSkyB will be shunning acquisitions. Among the businesses the company is rumoured to be interested in are OneTel, the telephony business being auctioned by Centrica, Video Networks, the privately owned television-on-demand service, and Pipex, the broadband firm that is thought to have received informal approaches from a host of telecoms and media firms.

If Branson is right about the combination of Virgin Mobile and NTL, a new force in British communications will be created, and the value of his 14% stake in the combined group will soar.

If Branson is wrong, the deal could rank alongside the railways in the “To be forgotten” list of Virgin ventures. Whichever category it falls into, the pace of change in British media is unlikely to be affected. In one form or another, convergence will be the driving force.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive