BSkyB Profit Rises 16 Percent on Web Demand; Shares Climb

British Sky Broadcasting Group Plc (BSY)’s fiscal first-quarter operating profit rose 16 percent, topping analyst estimates, as the U.K.’s biggest pay-TV broadcaster sold more broadband products to its subscribers.

The stock rose as much as 3.7 percent in London trading. Earnings before interest and taxes and other items rose to 295 million pounds ($465 million) in the three months through September from a year earlier, the company said today. Analysts had estimated 286.5 million pounds.

BSkyB, which reached its target of 10 million subscribers last year, moved its strategy away from adding customers as subscriber growth slows. The company, in which Rupert Murdoch’s News Corp. (NWSA) owns 39 percent, has focused on selling high-definition TV services alongside Internet broadband and telephone subscriptions to existing clients. First-quarter sales rose 9 percent to 1.66 billion pounds.

“A lot of the growth has shifted from the core TV business to the telecoms side of it,” Will Smith, an analyst at Jefferies International in London, said via phone.

BSkyB shares climbed as much as 25 pence to 700.5 pence and were up 2.9 percent as of 8:31 a.m.

The company added a net total of 150,000 broadband clients in the quarter. Net TV customer additions slowed to 26,000 from 40,000 in the prior quarter compared with an estimate of 38,000 clients.

New Broadband Clients

“TV is proving a bit more challenging but we’re compensating for that well with the growth in broadband,” BSkyB Chief Executive Officer Jeremy Darroch told reporters on a conference call. Growth in TV subscriptions will be “harder to come by in the next few quarters.”

While pressure on U.K. household budgets remains “acute,” BSkyB is signing up broadband customers from rivals including TalkTalk Telecom Group (TALK) Plc and Virgin Media Inc., Darroch said.

U.K. inflation accelerated to match a record high in September as consumer prices rose 5.2 percent from a year earlier, compared with 4.5 percent in August, the Office for National Statistics said this week.

BSkyB, based in Isleworth, England, said in July it would buy back 750 million pounds in shares after News Corp. abandoned its 7.8 billion-pound bid for the rest of the company. BSkyB said at the time that James Murdoch, the 38-year-old son of Rupert Murdoch, will remain chairman after his position had come under scrutiny following a phone-hacking scandal the News Corp.’s U.K. newspaper unit.

BSkyB has fallen 18 percent from this year’s high of 850 pence before the Guardian reported July 4 that News Corp.’s News of the World employees intercepted murder victim Milly Dowler’s voice mails in 2002.

Bloomberg LP, the parent of Bloomberg News, competes with News Corp. units in providing financial news and information.

To contact the reporter on this story: Jonathan Browning in London jbrowning9@bloomberg.net.

To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net;

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.