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British Sky Broadcasting Group PLC (BSY.LN) Thursday said it has entered 2010 in a good position as it reported an increase in fiscal first-half earnings and sales as more customers signed up for its pay-television, Internet and telephone services and as existing users upgraded to high definition.

The U.K. satellite TV operator also said it will launch its 3D channel in April--the first in Europe--and will give the public a sneak peak this Sunday by televising a soccer match between Arsenal and Manchester United in nine pubs in London, Manchester, Cardiff, Edinburgh and Dublin.

The selected pubs have been kitted out with some of the first '3D ready' TV sets to reach the U.K. and Ireland. As 3D TVs become more widely available, BSkyB said it will roll out its 3D channel to "hundreds of pubs from April".

"While the economic outlook remains uncertain, we remain well positioned with high-quality products offering customers great value for money," Chief Executive Jeremy Darroch said in a statement.

Operating profit before exceptional operating costs--the key figure tracked by U.K. analysts--rose 3.4% to GBP401 million for the six months ended Dec. 31, below market expectations of GB413 million because of higher-than-expected start-up costs related to new high definition customers. That compares with GBP388 million over the same period a year earlier.

BSkyB added around 500,000 HD customers in the fiscal second quarter, well up on the 300,000 analysts expected, and will boost earnings down the track, Darroch told reporters on a conference call.

To continue the strong momentum, BSkyB said it will start selling HD-enabled boxes as standard and customers will receive the box free when they subscribe to its HD pack of channels, effectively immediately.

More Britons are staying at home watching TV or surfing the Internet for their entertainment during the recession, resulting in strong demand for BSkyB's services.

Revenue rose 10% to GBP2.87 billion, broadly inline with expectations of GBP2.86 billion, underpinned by 172,000 net customer signings. That compares with revenue of GBP2.60 billion a year earlier.

As customers upgraded their packages, average revenue per user rose 11% to GBP492 in the second quarter from GBP444 a year earlier.

At present, 18% of BSkyB's 9.7 million customers have its pay-TV, Internet and telephone services package. CEO Darroch is confident the company will hit the 10 million customer mark "during the course of 2010."

The results, particularly the increase in HD customers, were well received by the market. At 0856 GMT, BSkyB shares were up 17 pence, or 3% at 571 pence in a higher London market. The stock has risen 31% over the past 12 months as it has proved resilient to the economic downturn.

Numis media analysts said the company has "produced another outstanding operational performance" in the second quarter, with HD additions well ahead of its estimate of 313,000, and "positions the group well to accelerate medium-term profitability."

Numis, which has a buy rating on BSkyB and 758 pence target price, said the company is one of its key picks for 2010.

BSkyB reiterated that it will review last Thursday's U.K. court judgement on its stake in ITV PLC (ITV.LN) and "carefully" consider its next move. BSkyB lost its latest attempt to stop the British government from forcing it to reduce its 17.9% holding in ITV, which revived some market talk about a potential bid for ITV. ITV is the U.K.'s biggest terrestrial commercial broadcaster.

First half net profit jumped 54% to GBP256 million from GBP166 million a year ago, due to higher revenues and cost cutting.

BSkyB declared an interim dividend of 7.875 pence a share, up 5% from a year earlier, underpinned by a 5% increase in free cash flow to GBP290 million.

News Corp. (NWS), which owns Dow Jones & Co., publisher of this newswire and The Wall Street Journal, holds about a 39% stake in BSkyB.

-By Lilly Vitorovich, Dow Jones Newswires; 44-0-207 842 9290; lilly.vitorovich@dowjones.com

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