High definition lifts earnings at BSkyB
SHARES in BSkyB rose yesterday after the broadcaster posted a surge in full-year pre-tax profit, driven by record levels of new subscriptions as cash-strapped customers stayed at home.
The dominant pay-TV firm said that its customer base had grown at its fastest rate for five years – with the addition of 462,000 subscribers over the period – thanks to “strong demand” for its high definition (HD) service and its TV, broadband and phone packages.
“This is the year where HD TV moved centre-stage,” said BSkyB chief executive Jeremy Darroch, adding that the firm now has 1.3m HD subscribers.
BSkyB reported pre-tax profit of £456m in the year, up from £60m in 2008, as revenues grew eight per cent to £5.4bn.
However, the leap in profit was partly caused by favourable comparatives, as the previous year’s financials had included a large impairment cost of £616m that BSkyB took on the value of its stake in ITV, the commercial broadcaster.
The impairment on the investment this year came in at £191m, helping the figures substantially.
The number of customers leaving was broadly level at 9.9 per cent, and the lure of HDTV and cheaper packages meant that the average amount each customer paid rose to a new high of £464 per year.
Darroch said he still expected the consumer environment to remain challenging but that BSkyB was well-placed as customers stayed at home. He also reiterated the broadcaster’s opposition to a report by industry watchdog Ofcom which said it should provide access to its channels to competitors for a regulated fee.
Sky increased the full-year dividend by 5 per cent to 17.6 pence, its fifth successive year of increases. Its shares gained 5.2 per cent to close at 546p.