Sunny sales help BSkyB lift gloom of first loss in 6 years

Published on Wednesday 6 February 2008 22:47

BROADCASTER BSkyB has reported its first loss in six years, after writing down the value of its stake in rival ITV.

Despite this setback, BSkyB shares leapt yesterday after the company revealed a major rise in product sales.

The owner of the Sky satellite television channels said that at pre-tax level it made a loss of 112 million in the six months to 31 December, after it was forced to write down its ITV stake by 343m.

Last month, Business Secretary John Hutton said Sky must reduce its holding in ITV from 17.9 per cent to below 7.5 per cent, after advice from the Competition Commission.

Shares in ITV have plunged, prompting the latest write-down, but Sky said yesterday it was "carefully considering" whether or not to appeal against the ruling.

Analysts had expected the ITV blow, and attention was focused instead on a rise in revenue of 11 per cent to 2.46 billion, as Sky reported strong growth in products sales.

Jeremy Darroch, presenting his first results as chief executive, said "almost half" of customers were now supplied at least two services by Sky.

Sky has made major inroads into telecommunications and broadband. A spokeswoman said the group expected to sign its millionth landline customer today.

Sales of Sky's premium TV products also strengthened, with an 18 per cent rise in high definition packages and a 16 per cent growth in Sky Plus sales, a package that allows customers to record multiple channels.

Sky admitted the rate at which its customer base was growing had slowed, with net additions falling 15,000 to 167,000 during the period, but Darroch maintained it was still on track to reach its ten million target by 2010. At the end of 2007, Sky had 8.83 million customers.

Darroch, who replaced Rupert Murdoch's son James as chief executive of Sky in December, said the company had entered 2008 "in good shape".

He denied the company was sensitive to a slowdown in consumer spending, stressing that some of its packages cost "less than the cost of taking a family out for a pizza once a month".

A spokeswoman said: "What we've seen in the past is that when there is a slowdown, families tend to stay at home more often rather than go out, so we don't expect any major impact (from an economic slowdown]."

BSkyB said first-half operating profits fell about a quarter to 295m, reflecting an increased investment in developing its broadband base, but said the investment had peaked.

The company increased its interim dividend by 8 per cent to 7.1p per share. BSkyB shares rose 7 per cent, or 38p to 577p.