BSkyB profit advances on HDTV
British Sky Broadcasting Group, which rejected News Corp’s proposed bid for full ownership last month, said annual adjusted operating profit rose 10pc 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 £855m (€1bn) from £780m a year earlier, slightly ahead of analysts’ average estimate of £852.9m.
Sales rose 10pc to £5.9m, 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 £7.8bn offer from Rupert Murdoch’s News Corp for the 61pc of the UK’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, US 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’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 9pc to £1.9bn.
BSkyB shares dropped 0.6pc to 715.5 pence at 9:53am in London trading.
Growth in high-definition services may “pause for breath,” Darroch said. About 30pc 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 23pc from a year earlier to £626m, after rising 17pc 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.