BSkyB Revenue Increases as It Signs Up Record TV Customers

British Sky Broadcasting Group Plc (BSY)’s first-half sales rose 6.3 percent as the U.K.’s largest pay-TV broadcaster signed up more customers for broadband and TV services, fending off increased competition from BT Group Plc.

Revenue was 3.76 billion pounds ($6.2 billion), the Isleworth, England-based company said in a statement today. That met analysts’ average estimate, according to data compiled by Bloomberg. The company proposed increasing its interim dividend by 9.1 percent to 12 pence. The shares climbed 4 percent to 878 pence in London, the biggest advance since Oct. 17.

BSkyB, about 39 percent owned by Rupert Murdoch’s 21st Century Fox, is facing increasing pressure from BT for pay-TV viewers and broadband customers after the former British phone monopoly announced three new premium sports channels in August - - free with a broadband subscription -- and then outbid BSkyB for the rights to two of the biggest European soccer contests.

“It’s a noisy period in terms of competition, but you can see across the board our business is continuing to power ahead,” BSkyB Chief Executive Officer Jeremy Darroch said on a conference call today in response to queries on the BT rivalry.

BT Rivalry

Adjusted earnings before interest, taxes, depreciation and amortization was unchanged at 813 million pounds.

Photographer: Simon Dawson/Bloomberg

A Sky logo sits above the entrance to British Sky Broadcasting Group Plc's (BSkyB) headquarters in London. Close

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Photographer: Simon Dawson/Bloomberg

A Sky logo sits above the entrance to British Sky Broadcasting Group Plc's (BSkyB) headquarters in London.

BT Sport channels agreed in November to pay $1.4 billion for exclusive live rights to UEFA Champions League and Europa League soccer games for three seasons from 2015-16. Darroch said at the time he was open to a wholesale deal with BT’s sports channels and that the Champions League accounted for less than 3 percent of viewing on Sky Sports, he said.

Under new licensing fees, BSkyB is paying more to show U.K. Premier League soccer games.

“The group is making excellent progress on its ’broader field of opportunity’ and in connected TV services,” Paul Richards, an analyst at Numis Securities in London, said in a note. “However, the Premier League auction continues to overhang the shares, particularly since the Champions’ League loss.” Richards recommends adding BSkyB shares

BSkyB said today Sky Sports viewing share is now at its highest level for six years.

Sky+HD Boxes

Separately today, BSkyB said it secured long-term rights for six sports including England overseas cricket, Scottish soccer and WWE wrestling.

Away from sports, BSkyB is focusing on getting customers to subscribe to more of its products, such as Sky HD; Sky Go, allowing users to watch Sky on mobiles and laptops; and Sky On Demand, in addition to broadband, phone and TV offerings.

The company said it signed up 1 million more customers to its Sky+HD boxes in the second quarter, bringing the total to 4.4 million. It also gained almost 900,000 new broadband customers and signed a new deal to air HBO programs in the U.K. and Ireland for the next six years. The two companies will also co-produce drama series for broadcast on the Sky Atlantic channel and HBO in the U.S.

BSkyB is in talks with Vodafone Group Plc (VOD) about possibly combining their services to offer customers packages of TV, Internet and mobile service, people familiar with the plans said this month. The two companies are already partners, agreeing to make Sky Sports content available to Vodafone mobile subscribers last year.

Darroch declined to say whether the companies were in talks, adding that much of the “speculation looks pretty wide off the mark and we’ll leave it at that.” He said the company has looked at adding mobile-phone service to its offering and wouldn’t rule out the service in the long term.

The average revenue per user rose 12 pounds to 570 pounds, the company said.

To contact the reporter on this story: Kristen Schweizer in London at kschweizer1@bloomberg.net

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

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