Sky shares take a dive as subscriber growth slows

LONDON – BSkyB said pre-tax profit was up 14% to £200m as it added 57,000 new subscribers, down 8% year-on-year to reach 7.84m, as the number of customers switching off also rose, sending its shares down almost 7% this morning.

The subscriber figure was dented by an 11.7% churn figure, up from 10.5% in the previous quarter. The satellite giant blamed viewers deserting its service on the recent price rise of between £1.50 to £3 a month for most customers and "a challenging economic and competitive climate".

Shares in BSkyB were down by 6.64% or 35p to 492p in early trading this morning.

Sky subscriber growth has slowed in the quarter compared with 83,000, almost 100,000 and 192,000 in the preceding quarters. It was also 5,000 subscribers down from the same period last year.

James Murdoch, Sky chief executive, admitted the group was hit by the churn, but insisted it was still on track to meet its subscriber target of 8m by the end of the year.

"The team has met or over-achieved core performance measures including sales, operating profit and earnings per share, notwithstanding an increase in churn. We remain on track for our 2005 and 2010 targets," he said.

Sky+ households increased by 139,000 in the quarter to finally tip the million mark -- reaching 1,027,000 households or 13% of the population with digital television sets.

Multi-room household take-up has more than doubled year on year, meaning those with more than one box and a major target for Sky growth, rose by 103,000 in the quarter to 748,000.

The company's revenues exceeded analyst estimates, rising 8% to £1bn. Profits after tax rose by 15% to £140m.

BSkyB's first-quarter results precede an annual general meeting at which the company is asking shareholders to approve a buyback of as much as 5% of the company's shares which would pave the way for News Corporation to up its stake in the company to 39% from 37%.

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