Oct. 23 (Bloomberg) -- British Sky Broadcasting Group Plc, the U.K.’s biggest pay-television provider, said new subscribers and demand for high-definition programs boosted first-quarter profit, sending its stock to the biggest gain in three months.

BSkyB, controlled by Rupert Murdoch’s News Corp., said in earnings before interest, taxes and exceptional items in the three months through September climbed 8.8 percent to 198 million pounds ($329 million). Sales rose 10 percent to 1.38 billion pounds, the company said in an e-mailed statement. Operating profit had been predicted at 189 million pounds on sales of 1.37 billion pounds, based on the average estimates of analysts surveyed by Bloomberg.

“We have won more clients despite the tough economic environment and I’m confident that we will continue to grow,” Chief Financial Officer Andrew Griffith said in an interview with Bloomberg TV today. He reiterated a target to reach 10 million customers in 2010.

BSkyB, which owns the Sky TV channels, won 94,000 net new subscribers in the quarter ended Sept. 30 for a total of 9.54 million. High-definition clients rose 287,000 to 1.6 million. BSkyB cut high-definition product prices last year and has offered broadband since 2006 to compete with cable-TV provider Virgin Media Inc. and BT Group Plc.

“Subscription revenue growth of 15 percent is exceptionally strong and suggestive of upward pressure to full year numbers,” Citigroup analysts including Marc Sugarman and Thomas Singlehurst wrote in a note to clients. “Profits growth also remains impressive in part due to progress in broadband.”

Shares Rise

Shares rose in as much 6 percent to 593 pence, the biggest intraday gain since July 30, and stood at 562.5 pence as of 1:44 p.m. in London. Before today, they had risen 17 percent, matching the performance of the benchmark FTSE 100 index.

“High definition has continued to perform very well and more customers are saving money by choosing Sky for each of TV, broadband and telephony,” Chief Executive Officer Jeremy Darroch said in the statement. “We absorbed the short-term costs of customer demand and delivered double-digit revenue growth.”

BSkyB gained 100,000 broadband customers in the quarter for a total of 2.3 million. Average revenue per user rose to 469 pounds from 430 pounds a year earlier.

U.K. Regulation

BSkyB Chairman James Murdoch, who is also the CEO of News Corp.’s European and Asian division, told shareholders at the company’s annual meeting today that proposals by U.K. regulator Ofcom on changes to the pay-TV market are “a threat to the climate for investment in this country.”

Ofcom in June proposed rules to make BSkyB’s film and sports channels available to competitors at set wholesale prices. The regulator said that BSkyB may be using its “market power” in the wholesale supply of channels to limit their distribution to rivals, therefore restricting consumer choice.

BSkyB has said it will fight the proposed rules and also challenge Ofcom’s right to rule on the matter.

“Regulators should respect the free operation of the marketplace and contemplate intervention only on the evidence of abuse or of a breach of competition law,” Murdoch said. “The interests of consumers are best served by businesses which invest and compete fairly, not by regulators who attempt to re- shape a market to their own design.”

James Murdoch is the son of News Corp. CEO Rupert Murdoch.

To contact the reporters on this story: Simon Thiel in London at sthiel1@bloomberg.net;

Last Updated: October 23, 2009 09:06 EDT