BSkyB boosts customers, revenue

Apogee

Irish Times wrote:

BSkyB boosts customers, revenue

Last Updated: Thursday, April 29, 2010, 09:25

Huge demand for high definition services enabled British pay-TV firm BSkyB to add 62,000 net new customers in the third quarter of the year, increase user loyalty and extract a record amount from each subscriber.

The strong performance followed decent results from pay-TV rival Virgin Media yesterday, which said it was adding new customers at its fastest rate ever.

BSkyB, the dominant pay-TV firm, has also benefited from its move to offer an increasing number of services, including broadband, telephony and HD, which has enabled it to draw in more customers and cross-sell to existing subscribers.

BSkyB also plans to roll out its new 3D TV service to residential customers later this year, along with a new video-on-demand offering, for little cost to the company because both technologies will use Sky's existing platforms.

"We've seen strong demand across the board," chief executive Jeremy Darroch said this morning. "We sold almost 900,000 net additional subscription products as customer demand continues to rise.

"To put that into perspective, that's more than 10 times what we were selling just four years ago."

The news sent shares in the group up 3.8 per cent to 619 pence in early trading, making it the top climber in the FTSE 100.

Sky, which added 428,000 HD subscribers in the three months to March, said its range of new offerings attracted strong customer loyalty, with churn, or the percentage of customers who dropped their subscription, at 9.9 per cent.

Analysts had been expecting overall net additions of 60,000, HD additions of 336,000 and churn of 10.4 per cent, according to a Reuters poll of nine analysts.

The new additions take Sky's total customer base to 9.77 million homes and the average revenue per user generated each year was above £500 for the first time.

Mr Darroch said the high definition offering had been the stand-out performer.

"It has exceeded everyone's expectations," he said. "At 30 pence a day it is great value and I think... the potential for future growth remains very good."

The group said the strong performance enabled it to post nine-month revenues up 11 per cent at £4.38 billion, compared with a Reuters poll expecting £4.37 billion.

Adjusted operating profit was up 5 per cent at £618 million, despite the investment required for new high definition boxes.

"The key performance indicators are encouraging considering strong results from Virgin Media yesterday, indicating that BSkyB is not feeling the effects of any increased competition in either pay-TV or broadband," UBS analyst Polo Tang said in a note.

The only concern for Sky in the current environment is a battle it is facing with the regulator, which has ruled that Sky must sell its prized sporting content to rivals at a heavy discount to current prices.

Sky has appealed to suspend the decision while it launches a full appeal and it is waiting for an outcome.

http://m.irishtimes.com/newspaper/breaking/2010/0429/breaking16.html?via=bbreaking