BSkyB profits increase 26% as customer base hits 10.9m
BSkyB has reported a 26% increase in half-yearly pre-tax profits as its customer base jumps to 10.9 million.
Pre-tax profits at the pay-TV company rose to £467 million in the six months to the end of 2010, with revenues up 15% to £3.2 billion.
BSkyB claims the demand for high-definition services – up 68% year on year – boosted its six monthly results. The company added 343,000 new HD customers in the period, taking the total number to 3.5 million.
24% of customers are now taking all three Sky services – TV, broadband and telephony. Meanwhile, the proportion of customers cancelling their subscription was 9.5% during the period.
Adjusted operating profit increased 26% to £520 million between July and September, while adjusted earnings before interest, tax, depreciation and amortisation rose 19% to £677 million.
“The business has delivered a half year of outstanding performance, with record product sales and strong double-digit growth in revenue, profit and cash flow,” Jeremy Darroch, chief executive of BSkyB said. “In particular, high definition continued to grow strongly and we achieved our highest broadband growth for more than two years. Looking ahead, we are cautious on the economic outlook for 2011, while remaining very confident in the long-term opportunity for the business.”
Overall BSkyB’s advertising revenues were £236 million for the period, 40% higher on last year due to the consolidation of Living TV. Excluding Living TV, ad revenue was up 14% year on year at £191 million. BSkyB now accounts for 17.4% of the total TV advertising market.
Speaking on BBC Breakfast this morning, Darroch said it was “very encouraging” that Sky had hit its 10 million customer target set by James Murdoch. He added that offering communication services as well as pay television developments such as 3D and on-demand viewing would be the key to future growth.
“It’s not just about adding more households, though we will do that. It’s about increasing the penetration of products in our customer base,” he said.
BSkyB also confirmed its acquisition of the UK public WiFi network The Cloud, which could pave the way for Sky to launch in to the mobile space. Andrew Griffith, BSkyB’s chief financial officer, said that the deal was under £50 million in value and that the company would now be launching a new service, Sky Anywhere, to allow customers to access content on multiple devices.
Speaking this morning, Darroch refused to answer questions on Rupert Murdoch’s planned buyout of the 61% of Sky that News Corp does not already own. Darroch said “there isn’t a bid on the table presently… we will comment if and when an offer is made after the current regulatory process”.
On Tuesday, culture secretary Jeremy Hunt announced plans to refer News Corporation’s BSkyB takeover bid to the Competition Commission, although he will will give News Corporation time to present undertakings, which may alleviate the concerns he has about public interest.
It has been suggested that News Corp’s undertakings include increasing the independence of Sky News, in a bid to push through a deal on media plurality grounds.
BSkyB has spent £7 million on News Corporation’s bid to take full ownership. “During the period, the group incurred advisory fees in relation to the News Corporation proposal and will continue to incur these fees as the process progresses,” the company said.
News Corporation will “reimburse the company for costs incurred up to a maximum of £20 million” if the merger is not granted.