BSkyB till awaits formal bid from Murdoch as World Cup boosts HD

Published on Wednesday 28 July 2010 22:28

STRONG demand for high definition TV ahead of the World Cup helped push annual profits at BSkyB up 10 per cent as the satellite broadcaster awaits a formal takeover bid from Rupert Murdoch's News Corp.

Close to 430,000 customers signed up to HD in the last four months of BSkyB's financial year when quarterly profits nearly quadrupled.

The strong finish saw operating profits for the 12 months to 30 June rise to 855 million while revenues jumped 11 per cent to 5.91 billion.

The firm is now within a whisker of reaching its ten million subscriber mark, having gained a net figure of 90,000 new subscribers in the last quarter, taking its total to 9.86 million. Almost a third of customers subscribe to HD.

BSkyB yesterday announced an exclusive deal to carry all new programming from Home Box Office (HBO), the US producer behind series such as Sex and the City and The Wire, as it beefs up its content in the face of price-cutting by rivals.

BT recently slashed prices for viewers who want to access Sky Sports 1 and Sky Sports 2 through its network to 16.99 - over a third less than the 26 monthly subscription currently charged by Sky.

The price war broke out after Ofcom forced BSkyB to slash by some 20 per cent the prices at which it sells premium sports content to rivals including BT and Virgin Media.

Speaking to The Scotsman, BSkyB's chief financial officer, Andrew Griffith, insisted Sky still offered the best content and combined prices for TV, telephony and broadband. He said it's too early to tell whether BT's aggressive price-cutting would have a significant impact on Sky's customer base but he added that BT's new price plan "belies the need for the regulator to mandate a (wholesale] price cut in the first place".

BSkyB has appealed the ruling but does not expect its case to heard before Easter 2011.

The broadcaster insisted there's currently "no offer on the table" from News Corp although Griffith confirmed his firm remained in a "co-operation agreement" with Murdoch's empire after it last month made an approach for the remaining 61 per cent it does not yet own in BSkyB. "News Corp are going through a procedure with regulatory filings," Griffith said.

In June, BSkyB's board rejected a 700p-per-share offer - valuing the stake at over 12bn - but analysts believe it would accept an offer close to 800p-per-share.

Griffith said the next few quarters would see BSkyB focus heavily on programming. It now broadcasts 43 channels in HD while it is preparing to launch its first 3D channel in October. However, Griffith acknowledged that the 3D market would be "niche on day one" as viewers will be required to purchase dedicated TVs.

BSkyB increased its full-year dividend by 10 per cent, a 50 per cent rise in the past five years.