Is the Virgin Brand Losing its Marketing Magic?

11 July 2007

LONDON: The ubiquitous Virgin brand - inextricably intertwined with its begetter, the publicity fixated Sir Richard Branson - may be losing its marketing magic.

Although spread widely across the globe, Virgin-branded ventures are rarely controlled either by Branson's Virgin Group holding company or himself. Some are little more than licensing agreements, controlled and operated by other businesses.

All, however, have a common investment in the value of the Virgin brand name - the worth of which, some fear, may be about to plummet.

They cite as evidence a report in UK Sunday newspaper The Observer that US private equity giant Carlyle Group, currently bidding to acquire Virgin Media for £11 billion ($22.18bn; €16.28bn), is considering renaming the cable and telecoms group if the deal goes through.

The irony of this is that Virgin Media (formerly US-listed NTL Group until it acquired Virgin Mobile's cellphone business in February and rebranded under the Virgin banner), did so because it perceived the strength of the brand to be greater than its own.

But Carlyle has reportedly questioned the value of retaining the Virgin Media brand - and also Branson's ongoing connection with the enterprise.

Aside from other considerations, the private equity firm believes his removal from the scene might make it easier to reach an accord with BSkyB - with whom Virgin Media is currently embroiled in a high profile dispute.

Branson holds around 10% of the media company's equity, acquired as part of the deal when NTL bought Virgin Mobile (whose cellphone business rides on the back of the T-Mobile network in the UK and Sprint Nextel in the US).

Reportedly, Carlyle has yet to make a final decision about axing the Virgin brand if it acquires the lossmaking business. But some observers believe the public airing of its concerns might signal the first crack in the hype-cemented dam.

Data sourced from BrandRepublic (UK); additional content by WARC staff