BSkyB close on 10m customers target

Jamie Grierson,Pa
Friday 22 October 2010 08:17
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BSkyB's customer base stood at 9.956 million households at the end of September
BSkyB's customer base stood at 9.956 million households at the end of September

Satellite broadcaster BSkyB moved closer to its target of 10 million customers today as it added 96,000 subscribers in the first three months of its financial year.

The group's customer base stood at 9.956 million households at the end of September - and it wants to hit the 10 million target, set in 2004, by the end of the year.

The broadcaster also saw a 39% leap in the number of customers who take TV, broadband and telephone services from the group - a total of 2.3 million customers.

BSkyB, which recently rebuffed a proposal by Rupert Murdoch's News Corporation to take full control of the UK satellite broadcaster, said it would be opening a new call centre, creating 500 jobs, to support the growth.

The climb in customer numbers came as BSkyB posted a 25% rise in operating profits in the quarter to £255 million and a 15% increase in revenues to £1.5 billion.

The customer number target was set six years ago by then chief executive of BSkyB James Murdoch when subscriber numbers were at 7.4 million.

The group is rolling out a strategy to attract customers to additional products such as high-definition (HD) television, phone and broadband services.

In the first quarter, the group said it turned its focus on home communications and achieved its highest ever combined quarterly growth for TV, phone and broadband customers, which boosted total additional product sales by 13% to 893,000.

BSkyB said 32% of its customers now subscribe to its HD service, with a further 215,000 net additions in the first quarter to surpass three million customers.

The start of the second quarter saw Sky 3D, Europe's first in-home 3D channel, launched with coverage of the Ryder Cup golf tournament on October 1.

But today's trading update did not give any further details on the progress of Rupert Murdoch's 700p-a-share approach for the 61% of BSkyB that NewsCorp does not currently own, valuing the FTSE 100 company at just over £12 billion.

In June, BSkyB said the proposal significantly undervalued the business and called for an offer in excess of 800p a share.

Media groups joined forces to launch an assault on the move, petitioning Business Secretary Vince Cable to consider blocking the plans.

Companies behind the Daily Mail, Daily Telegraph, Guardian and Daily Mirror - together with bosses at broadcasters BBC, Channel 4 and BT - signed a letter to Mr Cable, fearing a deal would pose a threat to competition and media plurality.

BSkyB said it had identified a number of potential locations for its new contact centre, but would not specify where it was looking.

The group has recently expanded its channel offering, after buying Living TV, and will launch a new channel - Sky Atlantic HD - in early 2011.

Sky Atlantic HD will screen new series from US channel HBO, as well as the fifth season of award-winning drama Mad Men, which was recently poached from the BBC.

The addition of Living TV will bring US hit series Nikita and America's Next Top Model to the schedule.

Matthew Walker, analyst at Nomura Research, said BSkyB needed a combined total of 140,000 customers in both the first and second quarters to hit its 10 million target.

Paul Richards, analyst at Numis Securities, said the robust results were encouraging and he added that he believed NewsCorp would successfully boost its stake in BSkyB by mid 2011.

He said: "We do not believe that NewsCorp increasing its holding from 39% to full ownership raises either competition or plurality issues."

Thomas Singlehurst, analyst at Citi Investment Research, said the change of emphasis to telecommunications had "worked spectacularly".

He said the timing of the potential deal with NewsCorp would drive share performance at the group, and keep the price above 700p per share.

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