BSkyB Operating Profit Rises on Broadband Internet Customers

British Sky Broadcasting Group Plc (BSY) said operating profit in the first nine months rose 20 percent as the U.K.’s biggest pay-TV operator sold more broadband connections.

Earnings before interest, taxes, depreciation and amortization in the nine months ended March increased to 1.19 billion pounds ($1.9 billion), the Isleworth, England-based company said in a statement today. The company added 212,000 broadband clients in the third quarter, compared with Bank of America Corp.’s estimate for 175,000 broadband customers.

BSkyB, with more than 10 million subscribers, increased marketing efforts to sell bundled packages that include Internet broadband, high-definition TV services and telephone subscriptions. The pay-TV company, in which Rupert Murdoch’s News Corp. (NWSA) owns 39 percent, in March started broadcasting Formula 1 motor races for the first time.

“Customers are giving more of their business to us than any other provider,” Chief Executive Officer Jeremy Darroch said on a conference call today. “Still, six of the nine months we’ve been in recession, the consumer environment remains challenging.”

BSkyB rose as much as 2.8 percent to 710 pence in London trading and was up 2 percent as of 8.08 a.m., valuing the company at 12 billion pounds.

Web TV Competition

BSkyB is adding new programs as it faces increased competition from Internet TV offerings after U.S. streaming-service Netflix Inc. started offering movies and TV shows in the U.K. this year. BSkyB is also trying to distribute more content on mobile phones and games consoles, outside its traditional satellite transmission. Sales in the first nine months rose 5 percent to 5.08 billion pounds.

BSkyB said in July it would buy back 750 million pounds in shares after News Corp. abandoned a 7.8 billion-pound bid for the rest of the company following a phone-hacking scandal at Murdoch’s U.K. publishing unit.

BSkyB had risen as high as 850 pence before newspaper reports in July that News of the World employees intercepted murder victim Milly Dowler’s voice mails in 2002.

U.K. lawmakers said yesterday that Murdoch was not a “fit person” to lead a major company, after his British unit misled Parliament about the extent of phone hacking at its News of the World tabloid.

The report may increase the likelihood that U.K. regulator Ofcom concludes News Corp. is unfit to hold a broadcasting license and ask the company to reduce its 39 percent stake in BSkyB.

BSkyB said today it is “engaging with Ofcom in this process and continues to believe that it remains a fit and proper license holder.”

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

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

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