BSkyB slightly down but 'in good shape'

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The Independent Online

The satellite broadcaster BSkyB said today it was trading well amid signs of increased customer loyalty.

The company posted a first-half loss of £112 million thanks to a £343 million write-down on its controversial 17.9 per cent stake in ITV, which it was told by the Government to reduce to less than 7.5 per cent earlier this month.

Stripping out this figure, operating profits were £307 million, down from £336 million a year earlier as the company reflected the cost of its new Barclays Premier League contract and the loss of advertising revenues because of a dispute with Virgin Media over the carriage of Sky's basic channels.

Chief executive Jeremy Darroch, who took over in December from James Murdoch, said the group entered the new calendar year in "good shape".

BSkyB recorded 167,000 net new customers for the quarter ended 31 December - slightly down on market estimates of 171,000 - taking the subscriber total to 8.83 million.

The broadcaster also reported increased customer loyalty during the period, with "churn" - the number of customers leaving the group - down to 10 per cent from 11.3 per cent the previous quarter.

BSkyB said its ARPU - average revenue per user - was at a record £421 for the quarter, up from £411 as at September 30, and £394 a year ago.

There was also double-digit growth in the company's other services, with Sky Broadband customers up 28 per cent to 1.2 million, subscribers to premium viewing package Sky Plus up 16% to 3.1 million, and those taking Sky's high definition service up 18 per cent to 422,000.

Mr Darroch said the broadcaster was "winning" in the market place, and was on track to reach 10 million customers by 2010.

He said the business had not yet seen any sign of a slowdown in customer spending, and was well-placed if that did happen.

"We have entered the third quarter in line with our expectations," he said.

"If people are starting to rein in their bills, they will be more focused on their home, and home entertainment becomes more important to people."

Mr Darroch, who added that the chief executive role had so far been "good fun", said the company was still considering whether to appeal against the ruling that it had to reduce its stake in ITV.

The holding is now worth around two-thirds of the £940 million originally paid in November 2006.

BSkyB has until February 25 to appeal against the decision, which was first made by the Competition Commission in December and was backed by Business Secretary John Hutton last month.

Speaking about making the transition from chief financial officer to chief executive, Mr Darroch said: "It's been very smooth and I am enjoying it a lot. We are seeing record sales - it's good fun."

James Murdoch, son of Rupert Murdoch, became chairman of BSkyB as well as taking up a senior position in his father's News Corp organisation.