BSkyB To Cease Analogue Broadcast This Summer
BSkyB plans to switch off its analogue broadcast completely, on target, during the summer of this year, the company announced this morning. Having grown its digital subscriber base to 5.4 million with a record quarter growth of 252,000 sales, Sky is in line to meet the target of 7 million digital customers by 2003.
The figures come as the satellite broadcaster unveils a strong financial performance for the nine months ended 31 March. Revenues grew by 27% to £1.7 billion and earnings were up 64% at £140 million. Nevertheless, loss before tax for the period came in at £105.1 million.
Sky says that advertising revenue remained, and continues to be, relatively buoyant, increasing by 16% on the comparable period to £200 million. This increase reflects the greater penetration of Sky’s channels, which rose to 38% of UK television homes, up from 33% last time, according to Sky.
At the end of March, 95% of satellite subscribers were connected to the digital service. Churn – the proportion of people leaving the service – was stable at 9.9%. ONdigital’s churn, by comparison, is currently around 22%.
However, the number of cable customers taking Sky channel packages dropped by 190,000 as the cable companies are more successfully marketing their own subscription packages that do not include Sky channels. As a result, revenues from cable dropped slightly.
BSkyB also confirmed that it has bought the HSBC and Matsushita stakes in British Interactive Broadcasting (BIB), the company which owns and operates the Open interactive TV service. Sky’s 80.1% stake now gives it full day-to-day management control of BIB.
Sky now plans to consolidate Open, along with all its interactive and online developments, into the Sky Interactive division. There will be a £40 million exceptional reorganisation cost after which annual cost savings are expected to be around £20 million.
Tony Ball, chief executive of BSkyB said: “With this deal Sky has taken control of its interactive future. We will now consolidate all our assets in one division, Sky Interactive, which will allow us to make cost savings, generate extra revenues and integrate more interactive content with television programming.”
Shares in BSkyB dropped heavily this morning following the results and were down 39˝p at 816˝p by 11:00am. This is mainly due to the losses at Open and the fact that its intended function as an ecommerce platform may be in question now that Sky is focusing its interactive strategy on games and programme strands rather than ecommerce revenues. As ABN puts it: “This could be taken as an admission that the success of ecommerce revenues has been mixed…”.
BSkyB: 020 7705 3000 www.sky.com
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