Broadcaster hints at strategy change and looks to resuming dividend payments

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Rupert Murdoch signalled that Sky may abandon a key revenue target set for 2005, in what would be a major change of strategy for the company.

Mr Murdoch Snr also told the AGM that, if Sky meets its internal goals this financial year, shareholders should expect to see the payment of a dividend for the first time in many years. In a press conference after the AGM, Mr Murdoch Snr said: "I believe we will see a big growth in subscribers. The declared Arpu [average revenue per user] target may take longer than proposed."

Under Sky's previous chief executive, Tony Ball, the company had committed itself to a target of £400 Arpu by the end of 2005. Yesterday's first-quarter results, published to coincide with the AGM, saw Arpu of £366, for the three months to 30 September, an increase of £18, over the period last year.

However, James Murdoch immediately contradicted his father, producing a confusing situation. Mr Murdoch Jr said: "At this point, we don't see any reason to change those targets. The company is tracking well."

The £400 Arpu target has been much praised in the City. It meant that the company had rejected a strategy that would see it maximise subscribers in favour of concentrating on higher-paying customers. There is speculation, that will be fuelled by yesterday's comments, that Rupert Murdoch believes the company should go for growth and accept "lower quality" subscribers.

The AGM passed a resolution that will enable Sky to pay dividends though it specified no timeframe. Mr Murdoch Snr said: "If we make the profits and cashflow we expect this year, we'll certainly announce a dividend at the end of this year."

Sky announced net subscriber growth of 170,000 for the first quarter of the financial year to take its customers at 7.02 million. The company made a profit, after tax of £90m, compared to nil in the period last year. Revenues were up 17 per cent to £850m.

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