RBS: BSkyB to see 8% revenue growth in 2011/12

BSkyB is in “robust shape” and could see 8% revenue growth in 2011/12 despite the on-going News Corporation saga, according to RBS forecasts.

The News Corp BSkyB takeover bid is looking increasingly unlikely, at least in the short term, as pressure mounts following the revelations about the News of the World phone-hacking scandal.

Yesterday, Rupert Murdoch manufactured a referral to the Competition Commission by withdrawing the ‘undertakings in lieu’ (spinning off Sky News) that it had previously offered. The CC will now look at the issue of media plurality, while Ofcom is able to investigate the ‘fit and proper’ issue at any time.

News Corp is thought to have engineered a CC investigation, which could take at least six months, to let opinion cool and “perhaps with a mind to exploring an exit of UK newspapers to focus on BSkyB – NewsCorp’s move keeps the approval process alive, but only just,” RBS said.

However, RBS believe Sky’s outlook remains strong, albeit in a difficult UK consumer environment. RBS forecasts 8% revenue growth in 2011/12 despite the (one-year) freeze in subscription prices from September 2011 as the rising penetration of HD, broadband and talk continues to drive ARPU (albeit at a slower pace than in 2010/11) and as the subscriber base continues to grow (RBS forecast it reaching 10.5 million by June 2012).

“We forecast 29% EPS growth in 2010/11 (FY results are due 29 July); in 4Q, Sky’s marketing focuses on broadband/talk (where Sky’s ‘value’ message resonates well in the current environment) and on Anytime Plus (the VoD service – free to premium customers). Our 2011/12 EPS forecast falls 0.5p as we reflect the pricing freeze (we had previously forecast a 2% price increase) but note that the company feels cost efficiencies can offset any shortfall”, RBS added.