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BSkyB launches new service to capture internet TV subscribers
BSkyB is looking to widen its service offering to non-subscribers through the internet
Broadcaster BSkyB revealed plans to expand its online television programming to non-subscribers yesterday after increased sales to existing customers lifted profits to record levels in the second half of last year.
The firm, which is also hiking its dividend, unveiled a range of new services aimed at the 13 million homes that do not currently subscribe to its satellite offering, paid for from its £450 million capital investment budget.
Not only is it increasing the range of its broadband offering to a further 200,000 households in Aberdeenshire, the Borders and Highlands, it is also set to offer “superfast” fibre broadband by teaming up with BT.
BSkyB is facing challenges to its business from the arrival of US internet film streaming site Netflix and a planned video-on-demand service backed by the BBC, BT and Talk Talk.
Yesterday it rose to the challenge, unveiling agreements to add BBC iPlayer and ITV Player to its existing Anytime+ platform and launching an internet-based pay TV service aimed at new customers. The company is also investing in a drive to improve customer service in a move that will create 1,300 jobs in Britain and Ireland. Chief financial officer Andrew Griffith told The Scotsman the new services had been planned for some time and were not a direct response to BSkyB’s new competitors.
He said that content remained the main driver of sales, with a strong comedy offering helping to attract a further 40,000 TV customers.
Griffith said the economic situation, with a depressed housing market and fewer purchases of HD TVs, was having a negative impact trading although the firm was still able to grow. “When those markets come back, we would expect Sky to be a beneficiary,” he said.
“We’re growing well in these markets. If the economy improves, and households find themselves in a better situation, then we can do even better.”
BSkyB’s revenue for the six months to 31 December was up 6 per cent to £3.4 billion, while operating profit was 16 per cent higher than the same period a year before at £601m.
The company said the number of customers taking its full internet, telephone and TV package was up by 26 per cent year on year to more than three million.
At the same time, improved customer loyalty as a result of a price freeze helped counter disappointing figures for new subscribers. The firm raised its interim dividend by 5 per cent to 9.2p, and said it would continue the £750m share buy-back initiated in November as a response to the collapse of last year’s takeover bid from Rupert Murdoch’s News Corp.
The shares closed up 24.5p, or 4 per cent, at 690p.
Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers, said the new products showed BSkyB would not “give up its crown lightly” and complemented its existing offering well.
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