Video Networks, the owner of Homechoice, accrued losses of £46.5m in 2004, up from £1.5m the year before, and it faces a future of even stiffer competition.
The company will have to compete with Sky, the recently merged NTL/Telewest and BT in the increasingly competitive TV broadband market.
Homechoice currently has 15,000 subscribers compared with Sky's 7.8m and NTL/Telewest's 5.5m. The group recently doubled the amount of homes that could receive the service to 2.5m, but it remains to be seen whether subscriber numbers will be boosted to anywhere near that amount.
The move could pave the way for a possible flotation next year if it is not snapped up first. City sources believe Sky would use the company for its own plans for video-on-demand and broadband.
The satellite giant raised just over £1bn by selling a three-part bond last month, which it hinted it could use for acquisitions in the broadband arena.
Last week, BSkyB bought Easynet for £211m, its first step into the broadband TV arena, which could later be merged with Homechoice if a bid was successful.
Last month, NTL and Telewest confirmed their £6bn merger, creating the largest provider of triple-play services in the UK and last month BT announced details of its own TV over broadband service.
Homechoice provides on-demand programmes spanning comedy, drama, music soaps, pay-per-view movies, home shopping and a broadband internet and telephone service.
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