BSkyB posts £1 bn profit for the year

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MUMBAI: UK pay TV service provider BSkyB has posted operating profit of £1.07 billion for the year, up from £872 million last year.

Revenue stood at £6.5 billion, up from £5.7 billion a year ago.

BSkyB has 10.3 million customers with net growth of 40,000 TV customers (DTH) and 31,000 standalone home communications customers in the quarter. Sky+HD customers reach 3.8 million, up 30 per cent year on year. There was growth in all home communications product lines with 2.4 million net additions in the year.

BSkyB chairman James Murdoch said, "We are pleased to announce both a 20 per cent increase in the ordinary dividend and our intention to return £750 million to shareholders through a share buy-back programme."

BSkyB CEO Jeremy Darroch said that while Sky is not immune to tougher economic conditions, it has continued to see good demand across its product portfolio as customers respond to the great quality and value that is offered. "The performance in home communications was particularly strong as we continue to grow all product lines. Over the year, we increased the number of customers taking all three of TV, broadband and telephony by 37 per cent and extended our potential reach by selling home communications products independently from television for the first time. We now have over 100,000 customers taking standalone broadband and telephony products and we see plenty of scope for continued growth."

BSkyB launched Sky Atlantic HD and Sky Living HD, while extending its leadership in high definition and 3D.

Darroch said that with a consistent strategy and a clear set of priorities, the company is well positioned for the opportunities ahead as it enters the new financial year. While the expectation is that the environment will remain challenging, the company will continue to pursue a balanced approach to growth and returns, based on sensible investment in areas of long-term advantage and a strong focus on operational efficiency.

BSkyB recently announced a price freeze for existing customers across television and home communications packages until at least September 2012.

TV additions for the quarter were 40,000, bringing the total TV base to 10.187 million. Within this loyalty remained stable with churn of 10.4 per cent in the quarter and ARPU increased by six per cent to £539, benefiting from a higher penetration of additional products. ARPU was £5 lower than the previous quarter largely due to the unwinding of a VAT benefit as a result of a reduction in the frequency of the customer magazine.

Darroch said that while product growth was broadly based, home communications performed particularly well as more customers saved money by switching their services to Sky. Net product additions across broadband, telephony and line rental increased to 595,000 in the quarter, 27 per cent higher than the prior year.

BSkyB currently has 107,000 standalone home communications customers and, in total, added over 420,000 new households in the year.

The company's performance in home communications means the number of customers choosing each of television, broadband and talk has grown by 37 per cent on last year to 2.8 million customers, representing 27 per cent penetration of the base.

"We have continued to extend our broadband network coverage, unbundling 385 additional exchanges in the year, increasing our footprint to around 80 per cent of households in the UK. At the same time, we are improving the economics of our home communications business by migrating more customers to our own network. We now have 1.7 million fully unbundled customers, 51 per cent of our broadband base," said Darroch.

BSkyB closed the quarter with more than 3.8 million high definition (HD) customers, an increase of 30 per cent on last year. In the context of exceptionally strong growth in the prior year following the reduction in the price of the HD box and the Fifa World Cup, net quarterly additions were lower than the prior year at 136,000.

"As penetration of HD-ready sets increases and our HD content offering continues to grow, we see a significant opportunity to continue adding HD customers," Darroch said.

On the sporting front, Sky Sports has achieved record audiences for last season's Premier League, with an average audience of 1.4 million viewers per game, 11 per cent higher than last year.

On the technology side, progress is being made in 3D, with Sky 3D channel winning a Bafta award for Sir David Attenborough's 'Flying Monsters', the first 3D programme ever to win a Bafta award. Sky 3D also achieved another first when it screened Matthew Bourne's production of 'Swan Lake' in conjunction with Sky Arts, the first full-length ballet to be shown in 3D.

"To support and facilitate further innovation and development of 3D content we are today announcing the formation of a new production company with Atlantic Productions, the producers of ‘Flying Monsters', to develop original 3D programming for UK and international audiences," Darroch said.

In terms of the future, the company will continue to invest in content, giving more people reasons to choose Sky. "In line with this strategy, we have announced plans to increase our investment in UK originated content and production by more than 50 per cent to £600 million in 2014. This will include weekly, original British comedy in 2011, a threefold increase in hours of original British drama and a tripling of our arts programming budget," Darroch said.
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