Profits soar as subscribers flock to watch BSkyB

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The Independent Online
British Sky Broadcasting, the recently-floated satellite television venture 40 per cent owned by Rupert Murdoch's News Corp, is making operating profits of over £5m a week.

BSkyB yesterday showed it was one of the very strongest performers in an improved performance at the halfway stage from News Corp.

BSkyB's underlying operating profits in the six months to December jumped 63 per cent to £110.6m (£68m), stripping out the £8.2m costs of the flotation - the biggest non-privatisation flotation which valued the business at £4.5bn.

At the pre-tax level profits lifted 46 per cent to £55m against £37.8m last time.

BSkyB revealed that during the period paying subscribers increased by 480,000 to 3.96m, with all three major revenue streams showing useful advances. Direct-To-Home subscription revenue rose 53 per cent, cable subscription revenue was up 72 per cent and advertising sales revenue 12 per cent. Over 70 per cent of BSkyB's customers subscribe via Direct-To-Home satellite receivers.

Sam Chisholm, chief executive and managing director, said: "By any standards this is an excellent result. In every area of operation the company has performed strongly."

The shares firmed 4p to 268p. Alastair Smellie, an analyst at Lehman Brothers, the broker, is forecasting profits of £136m in 1995, and £277m the following year. However, he believed the shares were 15 per cent over-valued. He added that current values were based on projections beyond the turn of the century, and that by then the satellite company would be looking at slowing revenue and volume growth and declining margins.

Meanwhile, News Corp as a whole has announced an eight per cent rise in interim profits to A$673m (£325m) after tax but before abnormal items. Operating revenues were up 5 per cent to.

UK newspaper profits (News Corp includes The Times, The Sunday Times, Sun and News of the World newspapers, rose 13 per cent, powered by higher advertising revenues from volume increases. There was also the benefit of a 15 per cent rise in advertising rates at The Sun, News of the World and The Times, last September.

Australia-based News Corp said its US television division, which includes Fox and eight television stations, performed strongly with operating results up 58 per cent. This was partly due to a strong advertising market and ratings gains from showing National Football League games.

Earnings from HarperCollins, the publisher, fell back, with book publishing the only division reporting lower operating income.

Overall, News Corp said that the firming Australian dollar cut pre-interest profits by about A$87m.