Sky still on target despite slowdown

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Sky is still on course to achieve its 8 million subscriber target by the end of next year.

This was the news from Sky's third-quarter results which saw a slowing down in overall growth: the increase of 66,000 subscribers in the third quarter, was the lowest quarterly rise for several years. The new total direct-to-home subscriber base is 7,274,000, sufficient for chief executive James Murdoch to declare the company is on track for 8 million subscribers by December 2005.

There was positive news on other fronts. Sky reached its target of more than 315,000 Sky+ personal video recorders three months early as subscribers rise by 72,000 to 322,000; of those 16 per cent are new Sky customers. Multi-room subscribers - those with more than one set-top box - doubled on the year to 270,000. Overall churn remained stable at 9.4%, despite price increases in the quarter. Average revenues per subscriber rise £18 on the year to £382. Group profit after tax for the nine months to March 31 rises from £28m last year to £243m on total revenues of £2.7bn, up 16%. Interactive revenues are up 50% to £219m. Sky says its strategy is to drive demand for pay-TV while at the same time managing the pace of growth to deliver increasing profits. "Management remains focused on the ongoing operational execution of this strategy and is confident that its medium term targets will be met," the company tells the City in a statement.

It emerged that James Murdoch has agreed a 12-month rolling contract, seven months after being installed as BSkyB CEO. Murdoch will earn an annual salary of £750,000, back-dated to November 2003, plus £200,000 per year in relocation and other expense allowances for three years. He will also be entitled to a bonus. Murdoch is being granted 450,000 BSkyB shares, though 70% of the entitlement will be subject to performance.

BSkyB is apparently back on a collision course with European Commission competition chiefs over football coverage rights. Sky won exclusive live UK rights to Premier League matches last August, but the EC later forced it to sell rights to eight games over three seasons to another broadcaster. The BBC and ITV were said to be in the auction after cable rivals NTL and Telewest and Irish pay-TV firm Setanta were priced out of the running. But in a statement released early this morning, Sky says none of the bids received in a tender process met its reserve price per match, previously agreed with the EC. "Sky will not, therefore, sub-license these rights," it says.

Hugo Martin  |  12.05.2004

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