BSkyB profits surge but rivals challenge

BSkyB yesterday underlined its financial strength with a 28 per cent surge in profits, but the pay-TV giant is facing growing pressure on subscriber numbers because of the economy and internet rivals.

Sky added just 40,000 new TV subscribers in the three months to December against 140,000 a year earlier.

Customers signing up for broadband, home phone and high-definition TV were all lower too. Sky sold a net 772,000 products to new and existing subscribers against 1.06 million.

Revenues rose 6 per cent in the last six months to £3.36bn because of a price freeze in August.

But pre-tax profits jumped to £597m, thanks to improved margins.

However, in a sign of how Sky may fear online rivals such as Netflix and LoveFilm, the chief executive, Jeremy Darroch, announced a new, cut-price internet-only TV service.

Viewers will now be able to watch Sky's movies and TV shows online or via a games console on a pay-per-programme or monthly basis, instead of signing up as subscribers.

Sky has not unveiled prices, but Netflix costs £5.99 a month.