BSkyB shares jump 15% as Sky Digital proves a success

SHARES IN British Sky Broadcasting jumped by almost 15 per cent yesterday as the satellite broadcaster unveiled strong initial demand for its new digital satellite service and set a revised target of signing 1m digital subscribers within a year of its launch.

The subscriber figures and enthusiasm about the prospects for Open, BSkyB's interactive television joint venture, overshadowed a more than 50 per cent drop in the group's pre-tax profits for the six months to December.

In the four months since it was launched at the beginning of October, SkyDigital, the broadcaster's 140-channel service, signed up 350,000 subscribers. Of these 120,000 were entirely new customers to BSkyB.

BSkyB further impressed analysts with the news that 98 per cent of digital subscribers had opted for the "family basic" package of channels, rather than choosing a cheaper package containing less channels.

Mark Booth, BSkyB's chief executive, said the company was now aiming for 1m digital subscribers by October. "It should speak volumes about our confidence in the position of the company," he said.

BSkyB shares closed up 60.5p at 474.5p, reversing a slide over the past few weeks.

Investors' enthusiasm for SkyDigital also translated into renewed fears that its rival ONdigital, the joint venture between Carlton and Granada, the ITV groups, was struggling.

Carlton shares closed down 38p at 596p, even though the television group issued a trading update.

ONdigital, which launched in November, has yet to release any subscriber figures. However, it is believed to have signed up about 60,000 users by the end of January.

Yesterday BSkyB also unveiled a joint marketing agreement with America Online, the Internet group, and demonstrated Open for the first time.

Open, which is a joint venture between BSkyB, British Telecom, Matsushita and Midland Bank, is set to launch an interactive shopping and banking service on BSkyB's digital platform this spring. Yesterday, Open announced that Dixons and Argos, the retail groups, would make their products available on Open.