Sky signs up another million satellite subscribers

BSkyB, the pay-TV broadcaster, yesterday smashed expectations when it reported gaining one million new satellite subscribers in the year to June, although the customer grab saw the company continue to swim in red ink.

BSkyB, the pay-TV broadcaster, yesterday smashed expectations when it reported gaining one million new satellite subscribers in the year to June, although the customer grab saw the company continue to swim in red ink.

It left BSkyB nursing a pretax loss of £262.7m, which marked an improvement from the £389m pre-tax loss a year earlier. Net debt nearly doubled to £1.15bn.

For that price, BSkyB increased the number of satellite subscribers to 4.5 million, giving a total of nine million, including cable, ONdigital and Irish subscribers. Total revenue, also boosted by strong advertising sales gains, rose by a higher-than-expected 20 per cent to 1.85bn.

Tony Ball, chief executive, said: "It was only the launch of digital that enabled us to start growing again. With digital we are able to offer additional services to our customers. That's the digital dividend."

Mr Ball, who has issued increasingly aggressive subscriber growth targets since taking over last year, again upped the ante by predicting a total of seven million satellite customers by 2003. He confirmed that BSkyB would switch off analogue satellite distribution in June 2001, 18 months ahead of schedule and pay Astra, the satellite group, a one-off penalty of £41m. Customers will be entitled to a free digital upgrade.

The rebound in BSkyB's subscriber growth came partially at the expense of cable operators. Cable subscribers to BSkyB fell fractionally to 3.1 million.

In a jibe to NTL and Telewest, both of which have fumbled digital launches, Mr Ball said: "The cable guys are still back of the queue at the chip shop trying to roll out their digital services."

Analysts said BSkyB had benefited from cable's disarray. "Analogue cable subscribers have got fed up," said one industry watcher. "They've been offered a superior service by Sky and they've taken it."

Mr Ball said digital, including Open, defined BSkyB's transition. "We are a multi-service company, we were a multi-channel broadcasting company," he said. Open, in which BSkyB now owns an 80 per cent stake, plans to triple the number of retail and content sites to around 100. "We are trying to personalise the service and build communities among our users," Mr Ball added.

Open will soon incorporate a Net browser which will be automatically downloaded in digital set-top boxes. That will enhance interactive functionality and more closely integrate Web and broadcasting content.

BSkyB blamed the rise in digital subscribers, fuelled by free set-top boxes and dishes, for a net cash outflow of £233m compared with a year earlier inflow of £238m. Operating profit, excluding interest and one-time charges, beat expectations at £85m, but was £100m below the year earlier figure.

BSkyB stock closed up 10p at 1247p.