As part of NTL's deal to buy Virgin Mobile and re-brand itself as "Virgin Media", NTL agreed to pay Richard Branson a minimum of £255 million just for a 30 year license to use the Virgin Brand.
For the avoidance of doubts, this was totally seperate to any other transaction associated with the merger - it bought NTL/VM absolutely nothing else, apart from the Virgin logo.
Was this money well spent?
Would subscribers have preferred NTL to remain "NTL" after the acquisition of Virgin Mobile and instead spend this £255mm (that merely bought it Virgin's logo), on something else?
In the words of Mrs Merton...... "lets have a heated debate"!

FT comment follows:
BUSINESS LIFE: The Virgin brand may not always boost your sex appeal
By Sathnam Sanghera, Financial Times
Published: May 05, 2006
Apart from my retirement date, which was recently revealed to me in a terrifying pension document, the most striking number I have come across in the past month was the minimum of £255m that NTL agreed to pay Sir Richard Branson for permission to use the Virgin brand on media offerings over the next 30 years, as part of its purchase of Virgin Mobile. A quarter of a billion pounds is a lot of money for something as intangible as a name. So much, in fact, that I decided to make an effort to understand what the cable company will be getting for its money.
My first port of call was a branding expert, but because I couldn't make his description of the Virgin brand as "sexy", "youthful", "innovative" and "cheeky" tally with my view ofSir Richard as a bearded 55-year-old with criminally bad taste in knitwear and a worrying predilection for dressing up in women's clothing, I came up with an idea for an experiment: I would spend an entire week living and breathing the Virgin brand, surviving only on goods sold by Sir Richard, to see what values his brand projects in practice.
The only problem with this idea, it transpired, was that while Virgin offers credit cards, balloon flights and fitness clubs, and while Virgin Galactic is taking bookings for trips into space, the company does not run supermarkets, so if I wanted to live for a week like a Virgin, I risked starving and not ever reaching my retirement on 12/10/2038.
So the plan was amended: I would sample as many Virgin offerings as I could, grading each one out of 10 according to how much they fulfilled Virgin's claims on its website that the brand always signifies "good quality", "brilliant customer service", "innovation", "competitiveness" and "fun". Scrolling through the long list of Virgin companies on the group website, and resisting the temptation to blow $30,000 a night on booking Sir Richard's Caribbean island, I decided to begin with Virgin Limobike, which has been offering a motorcycle taxi service in London for more than a decade.
The rider wouldn't have to do much to impress me: if he arrived on time, kept the vehicle on the road and got through the journey without once wishing death upon America,
it would be a big improvement on my local cab service. In the event, he passed with flying colours: getting me to my destination in half the normal time without once mentioning the Middle East situation over the intercom. The service fulfilled almost every Virgin brand criteria - it was fun, innovative, even value for money - earning it a score of nine out of 10.
However, my next Branson experience, a return journey from London to Wolverhampton on Virgin Trains, was less enjoyable. I doubt this is a surprise to many: you could probably cluster bomb Greater London without hitting a single person who has anything nice to say about Virgin Trains. And I'm afraid my experience was predictably abysmal: the train was on time but the heating was turned up too high and the carriage was overcrowded. The only innovative thing about the experience was an unusual smell wafting from the loos. Hardly the Orient Express: three out of 10.
Things continued in this rollercoaster manner for the remainder of my experiment. I had lunch at Babylon, Sir Richard's restaurant in Kensington, which was very nice (eight out of 10), but then spent several days listening to Virgin Radio, which eventually started sounding like one long, grating guitar solo (two out of 10). I went to buy some CDs from the Virgin Megastore, which was satisfactory (seven outof 10), but then found that Virgin Books publish very little of any interest (three out 10).
At the end of it all I arrived at the conclusion that Virgin's brand values are as clear as the ownership structure of many Virgin companies (some aren't even owned by Sir Richard any more: Virgin Records, for example, belongs to EMI and Virgin Radio is owned by the Scottish Media Group). While some Virgin enterprises are fun and sexy and innovative, others are as thrilling as toilet bleach. Which raises the question: why is NTL paying so much for the tag?
A couple of explanations suggest themselves, the first of which is that the Virgin brand is essentially a projection of a personality. This personality may have a dodgy beard and a toothy grin, but it is essentially a sympathetic one. The appeal for customers is psychological: when I was having a terrible time in the Virgin Trains buffet car between Sandwell and Birmingham, I found it comforting to think that, if I really really wanted to, I could get a flight to Necker Island, knock on Sir Richard's mansion door and complain to him personally about the quality of my bacon bap. I'd like to think he would have listened before having me thrown into the Atlantic Ocean.
Also, in a perverse way, I think the inconsistency of Sir Richard's offering is part of the appeal. It shows that Virgin's brand values aren't enforced in a corporate way, and not-being-corporate is a quality that the People's Capitalist, who has managed to succeed in business without resorting to RAC membership and golf, has always projected.
However, for NTL, I think there is something more fundamental driving the decision to pay millions for use of the Virgin brand. For the cable company, the central appeal lies in the simple fact that Virgin is not NTL, a service that has, over the years, made itself as popular as the H5N1 variant of the bird flu virus with customers. Frankly, almost any other name would have been an improvement.

[jauh]

Apparently, Uma cost VM £18M!!!

Uma Thurman's earned an estimated £18m to promote Virgin Media

Originally Posted by jauh

Apparently, Uma cost VM £18M!!!

Money well spent?

If they'd got rid of Ulma, they'd have only had to find 1.5p, per subscriber per day for the missing channels!

Now the big question is: Did the additional business that Ulma's commercials brought in, compensate VM for the revenues they lost (via retentions deals) and any medium term reductions in new subscribers, who might not consider paying for a TV service that lacks such high profile channels?

[jauh]

Originally Posted by nojo608

If they'd got rid of Ulma, they'd have only had to find 1.5p, per subscriber per day for the missing channels!

Even less if you didn't have to pay a minimum of £8.5M per annum for "Virgin"

[Kotori]

I have to wonder if VM have the interests of both their current customers and their potential new customers (to whom they are advertising to) at heart.

They are happy to pay millions for a brand name, for celebrity adverts and to advertise a single program (Big Brother) as well as many other 'valuable' endures, yet refuse to pay a little more to Sky (which in comparison to some of these sums is peanuts, even if doubled - which Sky deny) for carriage of their channels.

If they are struck for money, would it not be best to spend this money on other things, such as improving VOD, bringing back the Sky channels and improving their service offerings. When they get more money, which Virgin has implied part of the reason why they didn't accept Sky was that it was funds they couldn't afford, then spend money on things such as this

[anna42]

Originally Posted by Kotori

I have to wonder if VM have the interests of both their current customers and their potential new customers (to whom they are advertising to) at heart.

They are happy to pay millions for a brand name, for celebrity adverts and to advertise a single program (Big Brother) as well as many other 'valuable' endures, yet refuse to pay a little more to Sky (which in comparison to some of these sums is peanuts, even if doubled - which Sky deny) for carriage of their channels.

If they are struck for money, would it not be best to spend this money on other things, such as improving VOD, bringing back the Sky channels and improving their service offerings. When they get more money, which Virgin has implied part of the reason why they didn't accept Sky was that it was funds they couldn't afford, then spend money on things such as this

Well said .Couldn't have put it better myself.

[jauh]

How much are they paying for BB again?..

Originally Posted by jauh

Even less if you didn't have to pay a minimum of £8.5M per annum for "Virgin"

Quite right - NTL would only have had to spent 0.75p per day per subscriber, if they hadn't splashed out on licensing the Virgin logo and Ulma!

[TVR]

And what kind of negative effect would being called NTL or not having adverts do for subscriber numbers

Originally Posted by TVR

And what kind of negative effect would being called NTL or not having adverts do for subscriber numbers

Far less than being on the front pages, TV news and Watchdog, day in day out for not carrying the highest profile pay TV channels and not recompensing subscribers for their loss!

[TVR]

Pure speculation on your part there.

[Kotori]

Originally Posted by jauh

How much are they paying for BB again?..

As far as I know, Virgin have refused to disclose the amount of sponsorship they have chosen to 'invest' in Big Brother. The previous deal was £3 million a year with carphone warehouse, but is rumoured to be more with Virgin, because of the extra exclusives they are getting.

[jauh]

Originally Posted by Kotori

As far as I know, Virgin have refused to disclose the amount of sponsorship they have chosen to 'invest' in Big Brother.

Guess we're just gonna have to wait for their SEC filings...

[Kotori]

Originally Posted by nojo608

Far less than being on the front pages, TV news and Watchdog, day in day out for not carrying the highest profile pay TV channels and not recompensing subscribers for their loss!

It depends on whether you consider £255 million for a brand name good value in contrast to what other uses that money could have been spent on. They may have wanted to shed the 'NTL' name, (although to be honest, I am not overly certain it makes too much difference), but you can come up with a new name and have a rebrand without paying £255 million, which in my honest opinion was money better spent elsewhere, but that's just me. To some people, perhaps, having a different brand is wholly more important, which is why they may have made that move.

[jauh]

What's VM's ARPU across all services?

[xyphic]

The NTL name has a lot of negative connotations (such as entering Chapter 11, bad customer service). The Virgin name has a lot of positive ones (a very well-known brand, seen as quite trendy).

In terms of marketing your product, name recognition is a *big* factor in whether someone will take your product. That's why I think they didn't go for the Telewest name (which doesn't have the negative connotations associated with NTL). Most of the general public wouldn't have a clue who they are. Given that NTL also bought Virgin Mobile as part of the same deal, it made sense to rebrand so that all their services had the same name (so terms like 'quadruple play' become feasible).

Whether having the Virgin name is worth the £255 million you mention, it's too early to tell. VM need to get their house in order, sort out the fiasco of the Sky channels and start to market their products aggressively. They've already made a start by getting sponsorship rights to Big Brother 8. Don't underestimate the pulling power of that programme. VM will expect to see an upsurge in mobile phone sales among BB's target audience. If their interactive features are any good, they may even get the hardcore viewers to switch to VM for television and maybe even broadband.

As for Uma, I think she was a bit overpriced. But then I know nothing about marketing budgets.

[Kotori]

The NTL name has a lot of negative connotations (such as entering Chapter 11, bad customer service). The Virgin name has a lot of positive ones (a very well-known brand, seen as quite trendy).

In terms of marketing your product, name recognition is a *big* factor in whether someone will take your product. That's why I think they didn't go for the Telewest name (which doesn't have the negative connotations associated with NTL). Most of the general public wouldn't have a clue who they are. Given that NTL also bought Virgin Mobile as part of the same deal, it made sense to rebrand so that all their services had the same name (so terms like 'quadruple play' become feasible).

Just my opinion, so I'd be interested to know if others think differently, but as an existing customer, I'd imagine most existing customers wouldn't really mind too much whether it was called NTL, Telewest, NTL:Telewest, <Some new name> or Virgin. As for new customers, I would imagine what would have better marketting value for Virgin is better features, services and content rather than what they are called. Which is more likely, "Hey! Sign up for Virgin, they've got a trendy name." or "Hey! Sign up for Virgin, I've got it and it's great, they've got all the channels I used to like on Sky for cheaper, <Latest hit show> on video on demand and brilliant and helpful service".

Brand names can go a certain amount temporarily, but good services, good content and happy customers can go much further, and it will be a much better investment of £255 million.

[starsailor123]

Originally Posted by nojo608

Quite right - NTL would only have had to spent 0.75p per day per subscriber, if they hadn't splashed out on licensing the Virgin logo and Ulma!

Thats still .75p more than its worth or using the flextech deal as a yardstick proably about .74p

[carl.waring]

To be honest, I think you're just having another go a VM. (No surprise there then )

I don't really give a monkey's about what they spend on advertising or branding. I get a good service at a good price so why exactly should I care?

They have advertising budgets and they have programming budgets. So do Sky. Sky could also advertise less and spend more money on decent UK-produced programming on Sky One instead of US imports repeated ad-infinitum, but they don't.

[Kotori]

I am not trying to have a go at VM at all. I'm glad that you are a happy and satisfied customer, and for the most part I am generally one too, but there is always room for improvement and advancement. I was mainly considering the question whether the money they have spent would have been better spent on improving these services even further and adding more valuable content and helping turn even more customers in happy customers, like yourself. There isn't a 'one size fits all' with television, as different things satisfy different people. The broarder and wider range of content and services Virgin can offer, the better.

Even if you wish not to debate the past, what about the future, is it more valuable to spend money on branding and advertising, or on improving their content and services? These days, are people more attracted to a service based on who is doing their advertising and what they are called, or more on what they have to offer and word of mouth? I think it's a fair question to raise

[carl.waring]

As I have already said, they have a budget for advertising, etc.. They also have one for system upgrades (broadband infrastructure/speed/whatever) and they have a budget for programming.

They are all seperate things. Just because they might half their advertising budget does not mean that they will have that money to spend on programming, etc.

As I also said, I get a service I like for a price I like. I don't really care about the rest of it as I have more personal issues to deal with