Sky considers bid for London's HomeChoice

Sky mulls bid for Homechoice

Jason Deans and Chris Tryhorn
Tuesday November 1, 2005




James Murdoch is understood to be contemplating a bid for TV-down-the-phone service Homechoice as the next stage in BSkyB's spending spree.
The satellite company is understood to be considering a bid for Video Networks, the company behind Homechoice, which offers subscribers video on demand, broadband and telephony.

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Homechoice: Video Networks' service offers 80 TV channels, video on demand, broadband and telephony services via phone lines
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Video Networks could be ripe for a takeover after reporting a £46.5m loss in accounts just filed at Companies House.

The company is reportedly warning it will run out of cash within a year unless it secures new funding.

BSkyB is looking for deals after raising £1bn in a bond issue and is expected to use some of this money for further new media acquisitions.

The satellite TV group made its first move earlier this month by agreeing to buy broadband provider Easynet for £221m.

Video Networks' Homechoice service offers 80 TV channels, video on demand, broadband and telephony services via telephone lines.

It was one of the pioneers of video on demand, the technology now being rolled out by the cable companies that allows customers to access an archive of TV programmes, films and music in their own time.

Homechoice is available to 2.5m UK homes, but it was reported in January to have just 15,000 subscribers.

BSkyB would hope that by putting its marketing and customer services muscle behind Homechoice, it could quickly boost take-up.

Buying Video Networks would also be a swift counter-move to BT's announcement earlier this week that it plans to launch a mass market TV service delivered over phone lines by next summer.

Video Networks was rescued from closure three years ago by Microsoft co-founder Chris Larson, who became the firm's largest shareholder after investing £60m. Other shareholders include Time Warner, Sony and Disney.

Triple play provider Homechoice has announced plans for a national rollout.

The ambitious move would more than quadruple the operator's coverage, taking it from 2.4 million homes to over 10 million homes.

The news comes amid speculation that satellite giant BSkyB is mulling a takeover bid for the firm as part of its plans to gain a foothold in the triple-play market.

Although Homechoice's customer base is relatively small - just 34,000 subscribers - the service claims it has a faster takeup rate than Sky or cable within its footprint.

"There's no doubt about the customer appeal of Homechoice," said Roger Lynch, chairman and CEO at parent company VideoNetworks. "We're now the fastest growing pay TV service relative to our footprint.

"We are growing our customer base rapidly and we are growing the proportion of our customers who buy all three services from us. This gives us great confidence in our decision to launch our national rollout and bring the attractions of Homechoice to a much wider UK audience."

VideoNetworks has appointed global investment bank Credit Suisse First Boston to assist the company with the required equity fund raising.