BSkyB unveiled plans for intensive marketing strategy and overhaul of the Sky brand to combat the slowing subscriber growth, but this did not assuage investors as the satellite firm's shares lost more than 90p.
News of the slowing growth sent Sky's share price tumbling when the market opened this morning, down by 8.14% to 553p, a fall of 48p, and the shares have continued to fall down 9.97% at 11am, a fall of 60p to 542p.
By 2pm, Sky's shares were down by 15.37% to 509.5p, a fall of 92.5p on this morning's opening price.
BSkyB's profit more than doubled for the year to June 30 with pre-tax profits for the year hitting £514m, up from £253m last year, beating analyst expectations, while revenues climbed 15% to £3.7bn.
However, slower-than-expected subscriber growth at Sky has left shareholders less than happy with the performance. The company said it added 81,000 subscribers in the fourth quarter of the year, making a total of 7.4m. It needs an average of 100,000 a quarter to reach its stated goal of 8m subscribers by 2005.
Unveiling the results today, James Murdoch, who took over as chief executive just under a year ago, set out plans to reach 10m subscribers by 2010, with 30% of subscribers having more than one set-top box and 25% having a Sky+ digital video recorder. Sky will boosting its marketing budget by up to 50% next year to try to achieve this.
Sky will have to try to lure viewers from challenger Freeview, the free-to-air service backed by the BBC, and also partially owned by BSkyB. The service is now in 4m homes and is on the increase.
Among the marketing plans is teh creation of a database containing information on all Sky non-subscriber households in the UK, with a campaign to be carried out through data marketing company Dunnhumby. Design agency Venture Three has also been appointed to overhaul Sky's identity, which will be incorporated on all marketing materials including advertising, the customer magazine Sky, direct mail, online and retail activity.
Murdoch said: "The framework that we are setting out today is one that is designed not only to ensure sustained and substantial profitability for the business, but also to position the group to continue to be a dynamic leader in the rapidly evolving UK digital television sector."
Meanwhile, Sky Media is undergoing a review of its £45m media planning and buying account for the first time in six years. Incumbent Universal McCann recently pulled out of the review.
If you have an opinion on this or any other issue raised on Brand Republic, join the debate in the .
_1.jpg)
.jpg)
