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Virgin Media has reported a drop in second-quarter sales following its row with BSkyB over the provision of its basic channels.

The cable TV provider confirmed that total revenues for the quarter fell to £995 million in the three months to the end of June, down from £1 billion in the preceding quarter.

In a statement announcing the results Virgin Media acknowledged that the slump in sales had been caused by a drop in its customer base, which fell by 70,300 on the previous three months.

"Customer losses included an estimated 40,000 due to the impact of Sky's removal of its basic channels from our platform on March 1st 2007," conceded the company, which now has a customer base of 4.7 million.

Rival broadcaster Sky withdrew some of its key channels from Virgin Media following a pricing row.

Virgin Media, created last year following a merger between Virgin Mobile and NTL Telewest, admitted that growth in subscribers to its cable TV service had been affected by the number of people leaving the service following the loss of the Sky channels.

The company revealed that most of the churn occurred in April, the month following the withdrawal of the channels.

As a result total net additions to Virgin Media's TV service were just 2,200 over the second quarter, down from 36,100 in the previous three months.

Nonetheless Virgin Media chief executive Steve Burch insisted that the group's TV business had demonstrated a "resilient" performance, while stressing that more people had signed up to receive broadband and mobile services from the group.

The company added a further 51,000 broadband customers to its books over the quarter, to reach a total of 3.5 million. Meanwhile the number of Virgin Media contract customers increased by 53,000 to 299,000.

"The second quarter results show encouraging broadband and mobile contract growth, a resilient performance by our TV business and signs that our fixed-line telephony business is starting to react to renewed management focus," Mr Burch claimed.

News that Virgin Media's TV service has been hit by its row with Sky comes after the company announced yesterday that it was delaying a strategic review of the business to give potential suitors more time to come forward with takeover bids.

The company said that its financial advisers had suggested that it should extend the process in order for those with an interest in acquiring the group to complete bid proposals "in a more stable debt market environment".