Sky subscriber growth slows down as profits hit £425m

by Sam Matthews

August 03, 2005

How long?

1 minute

Sky subscriber growth slows down as profits hit £425m

LONDON - BSkyB subscriber growth has slowed in the final quarter with only 83,000 new users compared with almost 100,000 and 192,000 in the preceding quarters, as profits after tax at the satellite broadcaster surged 32% to £425m.

Sky added 95,000 new subscribers in the third quarter and 192,000 in the second quarter. More promisingly for the broadcaster, the 83,000 figure for the fourth quarter was 2,000 higher than the same period in 2004.

This takes the total number of Sky Digital homes to 7.8m from 7.4m last year, representing 30% of homes in the UK and Ireland with Sky, compared with 28% last year.

The satellite broadcaster also said it was on track to reach its target of 8m subscribers by the end of 2005, which will entail having to gain 100,000 new subscribers each quarter to December.

BSkyB chief executive James Murdoch is likely to warn that he will need to raise promotional spending and cut prices to ensure that the group achieves its long-term customer growth targets.

"In a highly competitive environment, we are confident in our ability to achieve our goals," Murdoch said in the company's financial statement.

Elsewhere, the satellite broadcaster added 118,000 subscribers to its Sky+ service in the final quarter. This takes the total number of Sky+ subscribers to 888,000 reflecting an 11% penetration of total digital homeowners -- marking 14% of new additions in the final quarter signing up to Sky+.

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 82,000 in the quarter to 645,000 -- marking an 8% penetration of total digital subscribers.

Shares in Sky dropped 1.8%, or 10p, to 541p on the news this morning.

The company's revenues exceeded analyst estimates, rising 11% to £4bn for the year ending June 30.

Profits after tax before goodwill and exceptional items rose by 34% to £805m, as profits after tax rose 32% to 425m.

Sky also said it had managed to save £75m in reduced programming costs on the comparable period by negotiating better rates on sports and movies.

Murdoch said: "The team delivered a set of results this year that demonstrates the health of our business and our strong position in this rapidly evolving marketplace."

If you have an opinion on this or any other issue raised on Brand Republic, join the debate in the .

Topics