Murdoch in line for £10m as Sky growth slows

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The growth of subscribers to BSkyB, the satellite television group, slowed to its lowest level since 1998, it emerged yesterday.

The growth of subscribers to BSkyB, the satellite television group, slowed to its lowest level since 1998, it emerged yesterday.

Results announced for Sky's third quarter were accompanied by a detailed statement on the bumper remuneration package awarded to James Murdoch, son of Sky's chairman Rupert Murdoch, who became chief executive in November. James Murdoch could earn at least £10m over the next three years under the deal.

The market had expected a low subscriber number for the first three months of 2004 but the news that Sky had added only a net 66,000 customers was well below expectations. Sky shares closed down 5 per cent at 621p. Analysts said the market was particularly unnerved by the company's refusal to give any indication of the figure it expected for the next three months.

Paul Richards, an analyst at Numis Securities, said: "We were looking for 92,000 [more subscribers]. However you cut it, 66,000 is a worrying number.... but nothing they said derails the medium-term model."

Sky was quick to emphasise that it expected to meet all the goals it had publicly set. The company is aiming for 8 million subscribers by the end of next year. Yesterday's figures took the total to 7.3 million homes.

James Murdoch said: "Sky continues to deliver improvement in its financial performance, and remains on track to hit all operational and financial targets. Slower DTH [direct to home] subscriber growth during the quarter reflected our decision to pull back on platform marketing in a seasonally quiet period."

The period following Christmas is usually slower for Sky but the first three months of the year produced many more new customers in the previous four years - there were a net 150,000 new homes last year and 171,000 in 2002. Analysts said the company appeared to spend the first quarter of this year rethinking its marketing strategy so that it would better target the homes that have so far proven resistant to the allure of pay television. A high-profile marketing campaign was launched at the end of March.

Annualised average revenue per subscriber for the quarter was £382, an increase of £13 on the previous three months, reflecting a price increase that took effect this January. For the first nine months of the financial year, pre-tax profit was £359m, massively up from £49m the previous year.

James Murdoch has a basic salary of £750,000, plus an annual relocation and expenses allowance of £200,000. He can also earn a yearly bonus of up to £1.5m. He has also already been awarded 450,000 shares - worth £2.8m at yesterday's closing share price - under the company's incentive plan.

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