Murdoch marks Sky debut with a return to the dividend list

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BSkyB resumed the payment of dividends for the first time in five years after reporting a huge leap in half-year profits.

In his first proper outing in the City, to present the group's interim results, new chief executive James Murdoch stuck rigidly to the operational targets of his predecessor, Tony Ball. Mr Murdoch, the 30-year-old son of the satellite group's chairman, Rupert Murdoch, took the Sky job in November.

Some analysts said it was disappointing that the company did not provide any vision of how it will sustain growth in the long term. Omar Sheikh, of Charles Stanley, said: "There wasn't really a strategy. He's still borrowing Tony Ball's. There is no strategic thinking attached to his [Murdoch's] tenure at the present time."

Others said Mr Murdoch had not been in the job long enough and that Sky was performing well in any case.

Mr Murdoch said: "We're seeing tremendous growth potential in our core business.... We're sticking to the operational targets the company has set. We are thinking about what happens after that. It's a very fluid marketplace."

Sky aims to have 8 million subscribers by the end of 2005, along with average revenue per user (Apru) of £400. There is also a less formal target of profits margins of 30 per cent in 2007. Paul Richards, an analyst at Numis, said: "If it ain't broke, don't fix it. He [Murdoch] hasn't been there long enough to do a root and branch review."

Sky reported revenue up 17 per cent to £1.77bn, for the six months to 31 December, while pre-tax profits increased to £204m, from £13m previously. In September-December quarter, Arpu was £369, up 5 per cent on last year, with direct subscribers added in these three months of 193,000, to take total customers to 7.2 million homes.

The company announced an interim dividend of 2.75p, the first payout since the interim dividend in 1999. The company had stopped paying dividends and invested the money instead in giving away its set-top decoder boxes and converting the subscriber base to digital technology. "I'd like to highlight a milestone for Sky [resumption of dividends]. This provides a neat bookend to that phase [running from 1999]. And I hope it is the beginning of a new phase."

Analysts welcomed the dividend news and said it showed the company was listening to the demands of its institutional shareholders. In response to questioning, James Murdoch revealed that he spoke to his father, whom he referred to as "the chairman", with "some frequency".

Also, a first for Sky chief executive, he did not respond to questions about the BBC and regulators by lashing out at them. To one question he said: "Do I think regulators are evil? Of course not." Sky predicted that 10 million homes will switch to pay-television by 2014.

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