BSkyB added 92,000 new customers in its fourth quarter and remains confident of future prospects, despite the worsening economic environment, overall annual losses of £127m and plans to cut 250 jobs.
The entertainment group's revenues grew 9 per cent to £5bn in the year to June, but operating profit fell 11 per cent to £724m, and adjusted profit – excluding exceptional restructuring and legal costs – fell 2 per cent to £752m. The biggest single contributor to the company's overall loss, which compared with profits of £499m in the previous financial year, was a write-down of another £616m on its 17.9 per cent stake in ITV.
But the news was not all bad, and although the group's shares dropped nearly 5 per cent in early trading, they closed the day up 1.74 per cent at 454.25p.
Alongside 92,000 net additions in the last quarter, the group added 200,000 broadband subscribers and 321,000 Sky+ digital recorder customers. Churn – the number of dropped subscriptions – was down to 9.8 per cent, its lowest level since 2005, following a sustained strategy to improve loyalty.
The slowing economy cuts both ways for BSkyB, according to Jeremy Darroch, the chief executive.
"The consumer environment is at the forefront of people's minds and there's no doubt it is more challenging than for some time," he said. "No consumer business is entirely immune but there are factors specific to our business that mean a lot of things are going our way."
For example, while broadband sales may be hit by a slowing housing market, there is significant potential in cash-strapped consumers staying at home. "Our experience in the last six months is that the company is still able to grow in a more difficult environment," Mr Darroch said.
There also remains considerable mileage in cross-selling broadband and telephony products to existing TV customers. More than half of subscribers take more than one product, up from less than 40 per cent a year earlier. But only 11 per cent take all three services – suggesting strong potential to add revenue.
A rise of just 10 per cent would add an extra £120m to the group's revenues.Reuse content