SATELLITE broadcaster BSkyB cheered investors on Thursday as it unveiled plans to buy back £500 million of shares alongside news of record full-year profits.
The group, which has more than ten million customers, has proven to be resilient in the face of weak consumer spending and a slowdown in the advertising market. It has been helped by customer loyalty and a strong programming line-up.
Operating profits in the year to 30 June rose by 14 per cent to a record £1.2 billion, while revenues were up 4.5 per cent to £6.8bn.
The firm added 312,000 customers throughout the year to bring its total subscriber base to 10.6 million.
An entertainment line-up including comedy drama Stella on Sky1 and fantasy Game of Thrones on Sky Atlantic helped bring in 57,000 households in the final quarter alone, although this was a slowdown on 78,000 in the previous quarter.
The group has focused in the past year on selling extra services to existing customers after it became increasingly difficult to sign more in the tough economic conditions. The approach enabled it to increase the average revenue per user to £548.
English Premier League audiences were up 12 per cent year-on-year, BSkyB added, with the Manchester City and Manchester United derby bringing in a record 4.29 million viewers.
The firm – whose Scottish centres in Dunfermline, Livingston and Uddingston employ thousands – proposed a final dividend of 16.2p per share, resulting in a total dividend of 25.4p, up by 9 per cent. The £500m share buy-back is subject to shareholder approval at a meeting on 1 November.
Chief executive Jeremy
Darroch said a “consistent
approach of investing where it matters most to customers” was working “extremely well”.
He added: “We will invest sensibly in areas where customers see value – in getting better on screen and improving our products and services – and maintain a strong focus on operating efficiency and cost control to underpin our investments and deliver increasing returns for shareholders.”
Sky also plans to pump £30m into the launch of its internet TV service, Now TV, as it moves to compete with online services such as LoveFilm and Netflix.
At a cost of £15 a month,
Now TV will start by showing films but, over the next 12 months, should add Sky’s
sports and entertainment offerings.
Steve Liechti, an analyst at Investec Securities, said the figures “look good overall” with churn – the proportion of people leaving the firm – “especially impressive” at just 9.9 per cent.
The brokerage has a “hold” recommendation on the shares.
Manoj Ladwa, head of trading at TJ Markets, said: “Impressive results from BSkyB as they managed to beat analyst estimates. Investors will be encouraged by the addition of 57,000 net customers in the fourth quarter and the bold share buy-back scheme.”
• TalkTalk has launched its first foray into television as the firm looks to compete with improved offerings from BT and Virgin Media.
The company, which lost thousands of customers in 2011 due to poor service, will offer its TalkTalk Plus package subscribers a free YouView internet TV set top box, with a 12-month subscription to LoveFilm Instant and access to pay channels such as Sky Sports.
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