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BSkyB beats forecasts on strong HD products subscriber growth
BSkyB 'not losing battle for subscribers to BT'
(about 5 hours later)
BSkyB has brushed aside competition from rival BT, hailing “explosive growth” in its on-demand TV service and a surge of more than 40 per cent in the take-up of products over its Christmas quarter.
BSkyB has reassured investors that BT’s aggressive entry into pay-TV is not hitting subscriber growth, despite an 18 per cent plunge in half-year profits to £527 million.
The group said its advertising campaign fronted by Absolutely Fabulous star Joanna Lumley helped it notch up five million customers for high definition TV in the quarter to December 31, while it saw a record one million connected Sky+HD boxes added in the three months - nearly 11,000 a day.
The fall in profits, the first in years, was expected as Sky had to pay a record £2.3 billion for Premier League rights when BT forced up the bidding.
Higher sports rights and content investment costs weighed on half-year underlying operating profits, down 8 per cent to £595 million, although this was better than expected, sending shares more than 3 per cent higher.
But Sky shares jumped 4 per cent as more than 100,000 new customers took broadband and phone and 77,000 took TV in the last three months — the first full quarter since BT Sport launched.
It added another 110,000 broadband internet customers in the last three months of 2013, despite the challenge from BT, which launched its own sport channels last August offering free Premier League football if customers sign up to a broadband package.
Espirito Santo bank said BT, which reports tomorrow, “is clearly not taking customers from BSkyB”.
Sky was left reeling after losing out in November on the UK rights to show Champions League and Europa League matches to BT, which paid almost £900 million to show both Uefa competitions for three seasons from 2015/16.
Sky sold an extra 873,000 products across its range in the quarter, with the growth coming from an additional 258,000 people paying for mobile service Sky Go Extra.Leaving aside Sky Go, the company sold 615,000 more products — the same increase as a year earlier.
Jeremy Darroch, chief executive of BSkyB, said the group was not prepared to pay over the odds for the rights, saying it believes there are "better ways to invest for our customers".
Chief executive Jeremy Darroch claimed the move to mobile and on-demand services was making customers “more loyal” as revenue climbed 6.3 per cent to £3.76 billion.
It announced a new five-year deal for the exclusive rights to the entire HBO TV catalogue, which includes top US shows such as Girls and Game Of Thrones, extending its existing agreement to 2020, having also just secured a new pay channel with broadcaster ITV, called ITV Encore, that will launch next year.
Numis Securities warned “the investment case remains clouded” over fears Sky may have to pay even more in the next Premier League auction after losing the Champions League to BT.
The group declined to comment on reports suggesting it has held talks with Vodafone about adding a mobile offering to boost its defences against BT, but Mr Darroch said Sky was "open-minded" about tie-ups.
Darroch said he doesn’t see it as “an imperative” for Sky to start offering mobile as he played down talk of a deal with Vodafone as “wide of the mark”.
He said: "Mobile has been something that from time to time we've looked at - we haven't ruled anything out but don't see it being imperative for the business."
