BSkyB backs Murdoch as chairman
Friday 29 July 2011
BSkyB today gave its backing to chairman James Murdoch after his role at the satellite broadcaster came under pressure in the wake of the News International phone-hacking scandal.
The FTSE 100 Index company said Mr Murdoch would remain as chairman as it revealed a 23% hike in annual operating profits to £1.1 billion - rubbing salt in the wounds of News Corporation, which earlier this month withdrew its bid for total control of the company.
The company also announced a partnership with rival BBC to broadcast live Formula 1 between 2012 and 2018, in a move which will see Sky Sports show all races, qualifying and practice sessions and BBC show half the races and qualifying sessions, including key dates such as the British Grand Prix and Monaco Grand Prix.
Mr Murdoch junior, deputy chief operating officer at News Corp, faced calls for his resignation as BSkyB chairman from MPs, shareholder groups and industry figures as the phone-hacking scandal unfolded.
The revelations led to News Corp pulling its bid for the 61% of the broadcaster it does not already own - for which it paid BSkyB a £38 million break fee.
Today's annual results laid bare the appeal of BSkyB to News Corp as the company revealed a 16% surge in annual revenue to £6.6 billion and net growth of 71,000 customers between April and June.
But there was some respite for News Corp as BSkyB revealed a £750 million share buyback - leading to a £293 million windfall for News Corp, more than covering the break fee it paid for calling off the approach.
BSkyB said the F1 deal with the BBC illustrated its commitment to grow even further - but would not reveal how much the rights to the sport cost.
Jeremy Darroch, BSkyB chief executive, would not confirm how much the company paid for the F1 rights, but said: "It's in the top tier of sports property."
He added: "I think we paid a good price for it. It's a great addition to what we do."
Regarding Mr Murdoch's continued role as chairman, Mr Darroch said: "The board discussed governance generally, that included the role of the chairman.
"In the end the board was unanimous in its conclusions."
Mr Darroch said as long as BSkyB continued to offer customers a good service and strong products, BSkyB would continue to grow.
He added that while the allegations at the News of the World were appalling and unacceptable, they had nothing to do with BSkyB.
BSkyB added 426,000 net customers over the financial year, with the number of customers taking its HD service hitting 3.8 million.
While operating profits increased, the results showed the pre-tax profits decreased by 15% to £1 billion.
More cheer for shareholders came as the company increased its dividend by 20% to 23.2p a share.
As well as the F1 deal, BSkyB also revealed a merger with Atlantic Holdings to form a new production company called Colossus Productions to develop 3D programming.
Shares were up by less than 1% after today's results were published - having fallen 15% over the past three months.
Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers, said: "Recent hysteria may have affected the share price, but the underlying business remains defiantly strong."
He added: "The clear message from the company is one of confidence for future prospects."
BSkyB hailed the performance of its new channel, Sky Atlantic HD, launched in February, with the standout show for the quarter being fantasy drama Game of Thrones, which reached 4.4 million viewers in its first season.
Sky Sports achieved record audiences for last season's Premier League, with an average audience of 1.4 million viewers per game, 11% higher than the previous year.
The company announced plans to increase its investment in UK-originated content by more than 50% to £600 million in 2014.
Under the F1 deal, the BBC will still have rights to show highlights of all races and qualifying sessions it is not covering live.
Barbara Slater, director of BBC Sport, said: "With this new deal not only have we delivered significant savings but we have also ensured that through our live and extended highlights coverage all the action continues to be available to licence fee payers."
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