BSkyB profits rise as customers flock to HD

HD subscribers pass one million for the first time
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The Independent Online

BSkyB has shrugged off the economic gloom to post a 13 per cent rise in profits in the first three months of the year, as the number of customers flocking to its high-definition service broke through the one million barrier for the first time.

Pre-tax profits at Sky, which is 39 per cent owned by Rupert Murdoch's News Corporation, rose from £56m between January and March 2008, to £63m in the corresponding period this year.

Sky cited "a strong take-up of additional products," specifically high-definition television and its TV recording service Sky+. During the quarter 80,000 signed up to Sky, bringing its total customers to 9.3 million.

Lorna Tilbian, an analyst at Numis, called it an "exceptional operation performance in the financial third quarter".

For the past year, Sky has been investing heavily in moving customers over to HD, saying it continues "to see a significant opportunity". Microsoft's founder, Bill Gates, said last year that HDTV would be everywhere by 2018, while analysts have said the recession has done little to slow its growth. Elroy Jopling of Gartner said HD was proving popular as families spent less on going out in the crunch.

Sky credits its move to slash the price of an HD box to £49 in January. When it first launched HD in May 2006, the cost was £399. The company said the new pricing "was met with an accelerated rate of take-up," with 243,000 customers signing up to the service. The rush proved to be a record quarter and took Sky's HD subscribers to 1.02 million, more than double the same time last year.

The growth in HD led Sky to pledge in January that it would create 1,000 jobs by June. So far it has added 750.

Sky+ also had a successful quarter, attracting 406,000 customers in the first three months of the year, up 55 per cent on the previous year.

"We have made a strong start to 2009," Sky's chief executive, Jeremy Darroch, said, continuing: "We are progressing well against the priorities we set out in January. The combination of the long-term trend towards high definition and the launch of our new HD box strategy generated a huge response."

HD television offers better picture and sound quality, although the subscription package is more expensive. While several broadcasters have launched HD channels, Sky has by far the most, currently running at 33. So far the highest viewing figures in the UK for an HD programme were for Manchester United's defeat of Tottenham Hotspur in the Carling Cup final.

Sky said its broadcasting figures were also strong with the return of "US drama favourites" including Lost and 24 during its third financial quarter. It is banking on a summer of sport to keep the ratings high, with The Ashes, the British & Irish Lions tour and the US Open Tennis screened on its channels.

Mr Darroch expects market conditions to remain challenging this year, saying Sky would "stay focused on cost efficiency to allow us to invest sensibly in areas that drive long-term value for the business, such as high definition".