Focus shifts at BSkyB

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The Independent Online
DISMISSING doubts that BSkyB's best days are over, Mark Booth, the new chief executive, last week detailed plans to boost the satellite broadcaster's presence from 25 to 75 per cent of British homes within five years. He will rely, he said, on neither programming nor pricing, but on marketing.

"There comes a ceiling to what you can charge - after that it's about how you package things," he said.

BSkyB, whose customers pay pounds 12 a month to receive 30 channels, has turned into a money machine for Rupert Murdoch and other shareholders by buying and dominating sports coverage, particularly live English Premiership football. But the emphasis on sport has come at the expense of potential revenues from non-sports fans, said Mr Booth.

BSkyB's subscription sales growth is slowing. That, along with increased investment costs, will cause the company to announce on Tuesday a 3 per cent drop in first-half earnings per share to 6.9p from 7.12p a year earlier, say analysts. They expect a 5 per cent drop in first-half profit to pounds 126m, compared with pounds 133m a year ago.

"BSkyB no longer has the pre-eminent upper hand it had," said Mathew Horsman, media analyst at Henderson Crosthwaite. "There's been a slowdown in subscription sales growth and cable TV companies are pulling back from building networks. There has to be a shift in BSkyB's strategy now."

Mr Booth does not rule out additional spending on improving its movie content, possibly including made-for-TV movies. "We're in negotiations with a handful of companies for made-for-TV movies," he said, refusing to be drawn further.

But the focus will be on broadening the broadcaster's appeal in the minds of the British public. "We'd like to get the same kind of credibility in other areas that we developed in sports TV," Mr Booth said.

However, he faces severe commercial pressures. Nick Bertolotti, media analyst at JP Morgan Securities, wrote in a research note: "The balance of power is shifting away from BSkyB towards cable and digital terrestrial television, as we expect new satellite subscribers to rapidly tail off in the future."

Copyright: IOS & Bloomberg