July 29 (Bloomberg) -- British Sky Broadcasting Group Plc, which rejected News Corp.’s proposed bid for full ownership last month, said annual adjusted operating profit rose 10 percent as more clients signed up for high-definition television service.
Earnings before interest, taxes and exceptional items in the year ended June 30 increased to 855 million pounds ($1.34 billion) from 780 million pounds a year earlier, slightly ahead of analysts’ average estimate of 852.9 million pounds. Sales rose 10 percent to 5.9 million pounds, the Isleworth, England-based company said in a statement.
“It’s been a very strong quarter for high definition,” Chief Executive Officer Jeremy Darroch said on a conference call. “It’s establishing itself as the new standard for television, especially for sports and movies.”
BSkyB in June rejected a 7.8 billion-pound offer from Rupert Murdoch’s News Corp. for the 61 percent of the U.K.’s biggest pay-TV operator it doesn’t already own. BSkyB spurned the 700 pence a share bid and said it wanted at least 800 pence. Investors said Murdoch’s bid doesn’t reflect the company’s increasing cash flow after investment in football rights, U.S. films and high-definition content.
BSkyB’s independent directors, led by Nicholas Ferguson, chairman of SVG Capital, said they may accept an offer of more than 800 pence a share. There is a “significant gap” between News Corp.’s proposal and the company’s value, Ferguson said last month.
The company said today it signed an agreement with Time Warner Inc.’s HBO pay-TV service to exclusively show all new HBO series including director Martin Scorsese’s “Boardwalk Empire” show. Financial terms weren’t disclosed. Total costs for programming and content rose 9 percent to 1.9 billion pounds.
BSkyB shares dropped 0.6 percent to 715.5 pence at 9:53 a.m. in London trading.
Growth in high-definition services may “pause for breath,” Darroch said. About 30 percent of subscribers have taken the high-definition service so far, he said.
BSkyB, which has 9.86 million customers, is aiming for 10 million by the end of 2010. The company attracted viewers to high-definition services after cutting installation prices for set-top boxes.
Full-year free cash flow, excluding the company’s settlement with EDS, advanced 23 percent from a year earlier to 626 million pounds, after rising 17 percent in the nine months ended March 31. The company added 90,000 net new customers in the fiscal fourth quarter, and a net 429,000 of its customers signed up for high-definition services.
To contact the reporter on this story: Jonathan Browning in London email@example.com.
To contact the editor responsible for this story: Vidya Root at firstname.lastname@example.org.