The sale of Virgin Media's content division would put up for sale a collection of some of the leading TV assets in the UK, including Virgin's 50% stake in UKTV, ad sales house IDS and channels such as Living.
A sales memorandum is expected to be issued following its next board meeting, set to be later this week after publication of its Q4 2008 results on Wednesday.
Paul Richards, media analyst, Numis, said: "Virgin Media refinanced its debt at the end of last year, but its debt is still high - which is why it makes sense for it to sell its non-core assets."
Interested parties are thought to include BSkyB, NBC Universal, RTL Group, several private equity groups and Channel 4. The content assets were put up for sale in 2005 and bids were placed for about £1bn.
The sale of the content operation is complicated by Lord Carter's Digital Britain review, which has suggested Channel 4 should look for possible synergies with BBC Worldwide to solve its funding crisis. It is understood the broadcaster is in talks with BBC Worldwide about possibly taking on certain sales contracts from IDS to beef up its scale, price and power in the market.
It is also thought that, should a Channel 4 and IDS deal come to fruition, the appeal of Virgin Media's content division to the likes of BSkyB and RTL Group would drop, potentially eliminating these companies from the sale and affecting the price tag of Virgin's content division.
A TV executive close to Virgin said: "Two years ago, Virgin took a strategic decision to exit the content business, but it has been delayed several times. But now it is likely it will issue an information memorandum to the market after its board meeting in March."
Virgin Media, Channel 4, BSkyB, IDS and BBC Worldwide declined to comment. RTL Group was unavailable for comment.
What are its content assets?
Virgin Media operates a content segment through its wholly owned subsidiaries Virgin Media Television and Sit-up TV.
Virgin Media TV also oversees Virgin Media's 50% interest in the UKTV joint venture with BBC Worldwide. Virgin Media values its 50% share in UKTV at £367.7m, implying a total value for the business of £735.4m.
Overall, Virgin Media's content division generated revenue of £348m in 2007, posting a pre-tax loss of £6.9m. In 2006, the division generated revenue of £362m, posting a pre-tax profit of £7.2m.
Excluding Sit-up TV, Virgin Media TV generated revenue of £109.5m in 2007, down 19.2% year on year. Sit-up TV revenue was £238.6m in 2007, up from £226.5m in 2006. Virgin Media generated income from UKTV of £18.7m and £12.3m for the years ended December 31, 2007 and 2006.
Virgin Media and content: the back story
- Telewest put Flextech up for sale in 2005
- The sale, which was eventually shelved, reportedly generated interest from Viacom, Disney, Sparrowhawk Media and BSkyB and valued the channels at about £800m
- Telewest subsequently combined with NTL and that merged company acquired Virgin Mobile for £962.4m to form Virgin Media in April 2006
- Flextech was rebranded Virgin Media Television in February 2007
- In July 2007, Virgin Media announced it had received a takeover proposal. That was shelved as the credit crunch began to hit deal-making prospects
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