(Adds detail, comment from CEO)
LONDON (Thomson Financial) - British Sky Broadcasting Group PLC. is
weathering the difficult consumer environment and is on track to hit full year
targets as the company reported solid third quarter key indicators including
adding and retaining customers.
Chief executive Jeremy Darroch told reporters on a conference call that the
company is resilient and well-placed to perform in the current consumer
environment because its services are important to people "particularly those
spending more time at home".
"Customers continue to subscribe, the company continues to grow in line with
its goals and we think we are well-placed," he said.
The pay-TV giant added 56,000 net new customers in the three months to
end-March, up 10 percent from the year-ago period, while churn, which measures
the number of customers defecting to rivals, fell to 10.5 percent from 13.7
percent in the third quarter of last year.
The company is also making more money from each customer, with average
revenue per user rising to 424 pounds from 421 pounds in the second quarter.
Gross customer additions came in at 289,000, lower than the 340,000 added in
the same period last year, which the company attributed to reduced discounting
on its packages and the new charge for installation.
BSkyB added 229,000 new broadband subscribers in the third quarter and
another 262,000 Sky+ customers.
The company said that despite the consumer environment, it is on track to
achieve its target of 10 million customers by 2010. It currently has a total
customer base of 8.888 million.
On the financials, nine-month sales rose 10 percent to 3.706 billion pounds,
while operating profit fell as the company continued to shell out for its
broadband investment.
Operating profit fell 18 percent to 504 million pounds as the company paid
out 127 million pounds for broadband investment, 20 million pounds for Easynet
and 17 million pounds in legal costs.
Adjusted operating profit declined by 36 million pounds to 521 million
pounds, hit by broadband costs, the loss of cable carriage fees as the
long-running dispute with rival Virgin Media Inc. continued, and the higher cost
of the new Barclays Premier League contract.
The company will also book a further 131 million pound impairment charge for
its ITV Plc. stake, which brings the total to 474 million pounds in the
nine-month period.
BSkyB, which spent 940 mln stg buying a 17.9 percent stake in the commercial
broadcaster at 135 pence in a stock market raid in November 2006, has seen the
value of its investment plummet to less than 65 pence per share, and has already
booked a 343 million pound loss in the first half.
BSkyB is appealing the Competition Commission's ruling that the company must
sell down its stake to below 7.5 percent, and Darroch told reporters this
morning that the tribunal is due to be heard in June and the company expects a
ruling shortly after that.
He would not be drawn on whether the company is prepared to sell the stake
now or if there has been any interest in buying it, although the owner of ITV's
commercial rival Five, RTL Group, is reported to be interested in the stake.
kathy.sandler@thomsonreuters.com
ks/slm
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