The Week Ahead: Cost of Premiership battle casts a cloud over Sky

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The Independent Online

Like the rest of the media sector, the last few years have not been kind to BSkyB. Shares in the UK's largest satellite broadcaster have failed to join in the general rally that has seen the blue-chip London index almost double since March 2003.

The shares are still languishing about 5 per cent below the 550p level where they were trading when the market hit its low point.

Third-quarter results, due tomorrow, are likely to be overshadowed by the bidding rights for the Premier League, with final bids submitted last Thursday.

BSkyB won three of the six packages on offer, but the other half is going to a second round of bidding that may force the price higher than BSkyB wants to pay.

The days of exponential growth of satellite subscribers are long gone and competition for the delivery of home entertainment is tougher than ever.

BSkyB will need to reassure investors that churn rates have stabilised, and that the company is moving forward to tackle broadband competition. The latter is likely to require a large amount of capital investment, and with Carphone Warehouse stealing a march on its rivals by offering "free" broadband for customers signing up to its TalkTalk service, BSkyB has some catching up to do.

Few analysts are predicting full disclosure of the investment requirements until the service is launched later this year.

The third quarter is typically the most robust for BSkyB due to new customers paying in full for services that were discounted at Christmas. As for the numbers, broker Teather & Greenwood is looking for pre-tax profits of £628m, a 21.2 per cent rise year-on-year. If those expectations are met it will be a good result in such a tough environment, but uncertainties over football rights and the costs of competing for broadband, telephone and television are likely to prevent any serious rally for the shares in the short term.

TODAY: The microchip group CSR has benefited from the phenomenal success of Apple's iPod, which uses its chip technology, and analysts expect good first quarter results if the company is to maintain its premium rating.

The shares have performed wonders in what remains a tough market for technology issues, having risen from 250p just over two years ago when the company listed in London to a high of 1,283p a week ago. Consensus forecasts are for pre-tax profits of $23m (£12.7m).

Results: Full year -Epic Reconstruction; Eureka Mining. First half - Aberdeen Asset Management; Formation Group. First quarter - CSR.

TOMORROW: BG Group has been on a roll in recent months. Fourth-quarter earnings, released in February, showed a 96 per cent increase thanks to surging oil and natural gas prices along with strong production figures. Analysts will be looking for more of the same in first-quarter numbers that normally benefit from the European winter.

Goldman Sachs is expecting operating profit of £657m from British American Tobacco, with further deterioration of the European market being offset by strong results from emerging markets. The broker also says BAT is well positioned to participate in the consolidation of the global tobacco industry.

Trading conditions for discount fashion retailer Matalan remain very tough. The chairman, John Hargreaves, who owns more than 28 per cent of the shares, is thought to be keen on taking Matalan private but a bid is unlikely in the near term as the company is actively buying its own shares back. Consensus forecasts are for pre-tax profits of £58.3m.

Results: Full year - Babcock International; Matalan. First half - Numis Corporation. First quarter - BG Group; British American Tobacco. Third quarter - BSkyB; Surfcontrol.

THURSDAY: No prizes for guessing which company is likely to report the biggest numbers of the week. Royal Dutch Shell, like all of its rivals in the oil industry, has benefited from the surging demand for oil and supply-side issues that have sent the price of oil soaring to over $75 per barrel in recent trade. Expect to see numbers match rival BP, with analysts pencilling in $5.6bn of pre-tax profits.

A strong first half from mining group Lonmin could see the company promoted to the FTSE 100 in June. The world's third-largest platinum miner has a market capitalisation of £3.8bn, more than £1bn more than Daily Mail & General Trust, the current favourite for demotion. Despite some relative weakness in metal prices last week the market will still be expecting bumper first half profits, with consensus forecasts of $284m in underlying pre-tax profits.

Results: Full year - Blacks Leisure; iTrain; John David Group. First half - Lonmin. First quarter - Imperial Chemical Industries; Royal Dutch Shell; Unilever.

FRIDAY: Results: None expected.