Boost for Sky as consumers splash out on HD and broadband

Boost for Sky as consumers splash out on HD and broadband (AFP via Getty Images)

BSkyB has reported an increase in revenue of almost 10 per cent after consumers showed they were still willing to pay for more services, despite the sluggish economy.

On average, its customers now pay £535 for an annual subscription, up from £510 a year earlier, as they add new services such as HD and broadband to their home packages.

Sky's strong financial performance, which pushed revenues to £1.6bn and produced a 33 per cent rise in profits to £307m, was driven by a strong take-up of broadband and fixed-line telephones. The company attracted a further 150,000 broadband customers and an extra 147,000 fixed-line customers.

Jeremy Darroch, the chief executive of Sky, said: "In tough market conditions, our move to more broadly based growth and multiple products is serving us well."

The number of customers taking its TV, broadband and fixed-line services is up by almost a third to 2.9 million of its 10.4 million customers. Churn, which measures the number of customers leaving, was stable at 11 per cent.

The only disappointment was the addition of just 26,000 new pay-TV subscribers during the quarter, down from 100,000 a year earlier.

Despite that, a spokesman for Sky was bullish. "With the economy the way it is, people are spending more time at home watching TV," he said, adding that customers' average viewing time rose to 3.87 hours a day over the quarter, an increase of 2.4 per cent.

The company also announced a price freeze earlier this year. Lorna Tilbian, a media analyst at Numis, said: "While all the utility companies are putting up their bills, Sky can look like the hero."

Mr Darroch cautioned: "Looking ahead, the environment is likely to remain challenging as a result of the pressures facing consumers."

However, he was confident that investment in the coverage of Formula One, as well as in shows like Glee, Terra Nova and Boardwalk Empire, would pay off. Programme spending rose from £53m to £535m during the quarter. This was offset by its cost-saving strategy.

Patrick Yau, an analyst at Peel Hunt, said: "This is a simple strategy being well executed, supported by tight focus on cost to drive margin growth and earnings progression."

Read More: Find the latest broadband deals