British Sky Broadcasting Group Plc (BSY), the U.K.’s largest pay-TV broadcaster, posted a full-year operating profit that beat analyst estimates and said it will buy back 500 million pounds ($774 million) of shares.
Earnings before interest, taxes, depreciation, amortization and some items in the 12 months ended June 30 rose 12 percent to 1.57 billion pounds, the Isleworth, England-based company said in a statement today. Analysts in a Bloomberg survey had estimated earnings of 1.55 billion pounds. The stock gained as much as 2.6 percent.
BSkyB, which relies on exclusive sports broadcasts to retain and win subscribers, last month increased spending on English Premier League soccer rights by 40 percent, agreeing to pay 760 million pounds per season. The pay-TV company also today announced the second share buyback since Rupert Murdoch’s News Corp. (NWSA) abandoned a 7.8 billion-pound bid for the rest of BSkyB following a phone-hacking scandal.
“It was less than clear that the company would announce a further buyback program,” said JPMorgan Chase analyst Mark O’Donnell. The second buyback was a ‘positive surprise’’ and may bolster earnings per share by 5 percent, he said.
BSkyB said last July it would buy back 750 million pounds in shares. With the new buyback, News Corp.’s existing holding will remain unchanged.
“This is a good way we can amplify returns to shareholders,” Chief Executive Officer Jeremy Darroch said today. For News Corp. “this is a good way they can support us.”
The stock gained as much as 17.50 pence to 702.50 pence in London today and was up 1.3 percent as of 8:09 a.m. The shares have dropped 5.3 percent this year, while the British FTSE 100 benchmark index declined 1.3 percent.
The company’s full-year sales gained 2.9 percent to 6.79 billion pounds. BSkyB added 57,000 net customers in the fourth quarter, compared with estimates of 71,000.
“Given the economic headwinds it’s always going to be a bit tougher” to increase net additions, Darroch said. “Our job is not to fret too much. I don’t think its dramatically changed but its hard to see any short-term improvements.”
Britain’s recession deepened in the second quarter, as the economy shrank 0.7 percent, the most in more than three years.
BSkyB, with more than 10 million subscribers, has focused on selling bundled packages that include Internet broadband, high-definition TV services and telephone subscriptions.
The broadcaster is also bringing out its own Web-television service, dubbed Now TV, as it faces increased competition from Internet TV offerings. U.S. streaming-service Netflix Inc. (NFLX) started offering movies and TV shows in January and Amazon.com Inc.’s Lovefilm expanded its service in the same month.
To contact the reporter on this story: Jonathan Browning in London at email@example.com