BSkyB Report Downgraded Following Digital Promotions

BSkyB’s digital TV war against On Digital (see Countdown To BSkyB Digital Launch Begins) has led brokers Merrill Lynch to downgrade the satellite broadcaster’s profit forecasts for the next two years.

Sky has promised free satellite dish installations to digital customers at a cost of around £80 per subscriber. As a result of this, along with slightly higher programming, subscription management and overheads, and higher anticipated BIB losses, Merrill Lynch has reduced profit forecasts for 1998/99 from £295m to £187m. Profit forecasts for 1999/2000 and 2000/01 have been reduced from £420m and £555m to £255m and £408m respectively.

BSkyB believes that it will reach 6 million homes by the end of 2003; this is forecast in a predicted pay-TV universe of 12 million in 2003. Merrill Lynch believes that it is more likely that Sky will reach around 5 million subscribers and that the total number of pay-TV homes will be 11.3 million by this date.

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