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Business News

Broadcaster BSkyB profits increase by 32%

Satellite broadcaster BSkyB today reported a 32% rise in profits as increasing sales of telephone and broadband packages offset a slowdown in new TV subscriptions.

An additional 26,000 households signed up for its TV services in the three months to September 30, bringing the total to 10.2 million, but this was down on 100,000 who signed up in the previous quarter.

But underlying profits rose to £327 million as the group benefited from "cross-selling" to existing customers, with strong sales of line rental, telephone and broadband packages. Some 2.9 million customers now take broadband and telephone packages in addition to TV.

Profits were also boosted by a £39 million "break fee" from Rupert Murdoch's News Corporation after it was forced to drop its bid to buy the 61% of the company it did not already own following the phone-hacking scandal.

BSkyB last year broke through its target of signing up 10 million customers and is now increasingly shifting its focus to selling more products to existing customers.

This helped average revenue per user increase by £25 to £535, while total revenues increased 9% to £1.7 billion.

Sky signed up 212,000 households to line rental packages, 147,000 to telephony and 150,000 to broadband, far outstripping the growth at its TV service.

Some 28% of its customers now take TV, broadband and telephone services from Sky, compared with 23% a year ago.

More TV customers are signing up to other TV-related packages, with 103,000 signing up for high definition and 45,000 paying extra for multiroom.

Sky also signed up 51,000 "standalone" customers in the quarter who use its telephone and broadband services but not TV. In total, it now has 10.4 million customers.

Chief executive Jeremy Darroch said: "In tough market conditions our move to more broadly based growth and multiple products is serving us well.

"New customers are choosing Sky over other providers, existing customers are taking more from us."

But he warned the environment is "likely to remain challenging" as consumers in the UK and Ireland see their living standards squeezed.