Virgin territory for media empire’s new boss in Ireland

They're starting to build houses again, which is good news for Virgin Media Ireland and its newly installed boss Tony Hanway, because "it is, excuse the pun, virgin territory". A cable company such as Virgin can "go in and do everything in one go, in a co-ordinated and clean way", and there's no disruption.

“One of the drawbacks in the last few years is there hasn’t been much housebuilding,” he says, but now that the economy is picking up, so too should customer numbers.

Next year, Virgin Media Ireland, freshly rebranded from UPC Ireland, will be "really upping the ante" on the rate at which it builds out its network, with about an 80 per cent uplift in its efforts to extend its footprint. But there will be no red lorries trundling along Ireland's dual carriageways, as per its television ad.

They “would be a bit big for the average housing estate”, says Hanway wryly, “but you wouldn’t believe it, we’ve had loads of kids looking for this red truck. We’re thinking, wow, we’ve got to get a few of these now.”

Some have speculated that the ad, deployed to launch the Virgin Media brand in Ireland, was meant to evoke Coca-Cola’s warm-and-fuzzy Christmas trucks. “I heard that, yeah. It wasn’t supposed to, but there’s no harm, a 30-year running ad . . . But we like to plough our own furrow. We don’t need Coca-Cola to sell Virgin Media.”

The Virgin brand, “underexposed” in Ireland, “can actually take us further” into both the consumer and business markets – once it has bedded down. “You can change the colours and you can have a lot of razzmatazz, but it doesn’t just happen overnight.”

Hanway, a former O2 Ireland chief executive, has joined Virgin Media Ireland at a time when the company, an independent subsidiary of Virgin Media UK, has not only rebranded, but added a mobile product to become a "quad-play" operator, and, most excitingly, bought itself a television channel.

"We're delighted," he says of TV3. "I think it's a great asset. Well, I would say that, wouldn't I? But they've come through a tough time and we think they're very well managed. We think the team there has done a great job."

At €87 million, with €7 million of that conditional on commercial targets, TV3 came at “a good price”. But the deal, which closed this week, is “a really good marriage” for both parties. “I think they would admit themselves that cash has been short over the last few years and cash is essential if you’re going out to buy content.”

Ah, content – the magic word in media, at least in this case. “Local exclusive sports content is the Holy Grail of broadcasting now, it really is,” says Hanway – a statement that confirms there will be quite a fight ahead for the next round of GAA rights.

Before the Virgin deal was signed, TV3 had already made a big move. It was not long coming down from its Rugby World Cup high when it snatched the rights to the 2018-2021 Six Nations tournaments from a stung RTÉ.

“I don’t imagine it was a hindrance to the guys in TV3 to be able to say to the rights owners: ‘We’re soon to be purchased by Liberty Global’s Virgin Media affiliate.’ I think that would have been a good calling card.”

With rival Eir buying Setanta this week, there's a sense that, in the business of leveraging sports rights, it's very much game on. But will TV3 be given the funds to make more of its own programmes? "Yeah, definitely. I'd love to think we could do more local content, especially content that could be exported. You've seen Red Rock, it's been very successful."

He laughs when I interrupt to say I've seen every episode of the TV3 soap and that they should have more than two a week. "Well, yeah, who's to say? Here's to that idea," he says, talking again about exportable creative services and the benefits of the "Liberty Global ecosystem".

Here's where TV3, the one-time plucky also-ran, starts to look like its in a strong position. Contrary to what its ads imply by placing Richard Branson behind the wheel, he owns only a fraction of the company. Instead, his Virgin Group licenses the use of the brand to Liberty Global, the cable giant controlled by John Malone, the Irish-American billionaire landowner.

“John Malone has been a good friend to Ireland,” says Hanway, citing Liberty’s “pioneering” €1 billion investment in its Irish cable network over the past decade. Known as the “cable cowboy”, Malone likes Ireland enough to have spent about €200 million on hotels, castles, a stud farm and other property here. He also happens to be the largest shareholder in Eurosport-owner Discovery Communications, while together, Liberty and Discovery own “super-indie” production shop All3Media and have a joint investment in the Canadian-American studio Lionsgate.

Then there's Liberty's 9.9 per cent stake in UTV-buyer ITV plc – a Liberty takeover of ITV is not unthinkable. Either way, Liberty is clearly getting bigger, not smaller – in content, in every way. No wonder Hanway is "more than happy" to be leading its Irish arm. "It was very hard to top 02, you know, O2 was a great company and there's a lot of companies I wouldn't want to work for, to be honest."

After 02 Ireland was sold to Three, Telefónica (the sellers) offered him a job in Munich as chief commercial officer of its German business. Hanway had previously done a stint for Telefónica in Prague, and initially wasn’t keen on leaving Ireland again.

“So I went to Munich on the proviso that, once the merger it was doing with [mobile operator] E-Plus went through, I’d step out,” he says, but, “maybe because I knew I wouldn’t be staying”, he enjoyed his time there. Munich, like Prague, is an “amazing” city, and although he had “kind of had enough of mergers after leaving Ireland”, it was one for his CV that the company had 20 million customers when he arrived and 46 million when he left.

“It had almost entirely nothing to do with me, but it looks great on the CV.”

When he returned to Ireland, he thought about changing industries, but when Virgin came calling, “I was interested, you know, I said: ‘Hmmm’.”

He had encountered UPC when it had taken a look at the for-sale 02. “I got to see them up close and I thought they were super-professional, I though they were very sharp. We talked amongst ourselves at the time, we said: ‘These would be good people to work for’.”

The timing was right, too, with the bonus of the TV3 acquisition and the move to make Virgin Media Northern Ireland part of Virgin Media Ireland in a “one-island approach” that will suit everybody, he says.

The two developments may dovetail if TV3 gains a foothold in the region. “Northern Ireland is one of the obvious places to expand TV3. We’ve had an example of someone from Northern Ireland coming into the Republic; why not the other way round?”

It's before his time, but the launch of UTV Ireland in January saw it replace what some customers impatiently called the "real UTV" on the UPC platform, and it ended up on the receiving end of viewer ire.

“I’m not sure if it was a bullet we deserved,” says Hanway. “The transmission changed – it wasn’t down to our choice. We like to carry the best content possible, but sometimes other moves mitigate against that.”

Speaking of transmission, broadcasters in Britain and Ireland, including RTÉ, have lobbied for a legislative change that would allow them to charge retransmission fees to television platform owners like Virgin, Sky and Eir. Hanway is not impressed. “They’ve got their advertising, they’ve also got a licence fee and, oh gosh, now they want a transmission fee as well – I think that’s actually laying it on a bit thick.”

These are “difficult times in content generation”, he concedes, but “to be honest, a lot of people are looking for somebody else to pay for their problem”, when instead they should be finding new business models (that don’t involve this).

On that note, one area Virgin is “very interested” in cracking at group level is targeted television advertising. The medium should be more effective “than just a 14-year-old watching a detergent advertisement that is of absolutely no relevance to his life”.

For years now, its television business, a descendant of Cablelink, has been shedding customers, which Hanway attributes to emigration and retrenched spending in its key demographics. “We have a great birth rate, but one-year-old children are not actually buying TV services.”

Just as it is for Sky (the dominant TV service provider in Ireland), improving the user experience is on the Virgin agenda, and it recently introduced a “Replay TV” function that allows viewers to scroll back up to seven days on certain channels. It’s the kind of thing that would blow 20th-century minds. “You always dreamt of that,” he agrees.

Then there’s the business of upgrading customers to Horizon, its fanciest (and more expensive) platform. “We haven’t been as proactive at shouting about it as we could have been.”

Beyond television, there’s its assault on a “fairly stale” mobile market as a mobile virtual network operator (MVNO).

“We have set ourselves some adventurous targets,” he says, declining to specify them. He is conscious that Ireland is “paved with failed MVNOs”, but thinks Virgin’s existing customer relationships (it had 503,600 customers at the last count) and competitive price point will see it take share. “We can go on the attack here.”

But really, as Eir would agree, it is broadband that is the biggest battleground in Irish telecoms and it is one on which Hanway feels Virgin is better-armed than the rest. “The cable asset is the real secret sauce here. That’s the jewel in the crown. It is way ahead of what the rest of them have in Ireland,” he says, dismissing the threat of Eir’s fibre offering. “Everyone would like to knock us off that perch, but I don’t think, technologically, they can. . . Let’s be clear here: cable technology is way better.”

And yet frazzled Virgin customers can be seen plaguing its social media representatives with reports of erratic connectivity.

“I would say we have seen 300 per cent more usage in the last three years. The amount of usage is rising all the time,” Hanway says. The “connectivity experience” will vary on wifi connections according to the device and distance from the router, he says. “One of the things we are looking forward to solving is making sure the wifi experience is absolutely rocket fast.”

Virgin Media’s base in Dublin’s East Point business park is very familiar to Hanway as, in the 1990s, he worked in the same park, for AOL. “It’s back to the future, you know.” It was a time when people could be heard “explaining an email address” and annual Powerpoint presentations referred enigmatically to a future of converged services and connected devices. “It never seemed to arrive. And the next year it was always: ‘Oh, I think I’ve seen this presentation before.’”

Now it has “finally come to pass” and he’s in the thick of it, with lots to do, “the good stuff, you know”.

There’s no “honeymoon period” for a chief executive. “That’s not what you’re hired for. You’re hired to hit the ground running. That’s the thrill of the job too, you know – that’s the thrill of the job.”

CV

Name: Tony Hanway

Position: chief executive, Virgin Media Ireland

Background and family: The 48-year-old Dubliner is from Killester, “up the road” from where Virgin Media is based, and lives in Sandymount with his partner Tara. He has a masters in human resource management from Leicester University.

Career: He began his career as a junior civil servant and worked for AIB in the UK before joining Gateway, "where I think half Irish ICT people have worked". He went to work for AOL, "because I read about this internet thing", and rose from sales and billing manager to managing director of AOL Time Warner Ireland. His decade at mobile group Telefónica included a period as chief executive of O2 Ireland.

Something you would expect: When he joined Virgin Media last month, he upgraded to its Horizon television platform, “for obvious reasons”.

Something that might surprise: “You wouldn’t believe how many people” have mentioned the Virgin Megastores to him. (The brand disappeared from Ireland eight years ago.)