BSkyB squares up to rival BT in TV sports battle

SATELLITE broadcaster BSkyB yesterday insisted its sports offering had “never been in better shape” as it threw down the gauntlet to rival BT with a leap in earnings and subscriber numbers.

Sky claim their sports offering has "never been in better shape". Picture: Getty

BSkyB is facing a rising threat from BT in the television market, ahead of this summer’s launch of the rival company’s sports channel, which has won the right to screen 38 Premier League games a season.

But BSkyB chief executive Jeremy Darroch said the group had an “outstanding summer of sport” lined up and announced further rights deals after renewing ATP and US Open tennis contracts and securing the rights for RaboDirect Pro12 rugby for the first time.

The group said that operating profits increased 9 per cent to £994 million in the nine months to 31 March and subscriber numbers passed 30 million for the first time.

Third-quarter figures showed the group signed up a further 70,000 net households – those joining, less those leaving – and said customers had taken out an extra 715,000 subscriptions. This helped average revenues per user rise by £30 to £576.

Sky said it was hiring an additional 550 staff across the UK to meet demand from its growing customer base, with 200 in its sales teams and 350 in a customer service centre in Newcastle.

But Sky admitted some cast-strapped households were ditching its services amid the tough economic climate as its rate of “churn” rose to 10.8 per cent from 10.1 per cent a year earlier, although Darroch said he was “comfortable” with the rate.

BSkyB added that it was waiting for Ofcom’s response after the watchdog launched an investigation into a complaint by BT over Sky’s refusal to run advertisements promoting the rival’s sports channel.

BT is claiming the move breaches TV advertising regulations, but Sky has argued it is reasonable not to carry ads for directly competing services.

The former telecoms monopoly is planning to roll out as many as three sports channels this summer and is taking on the might of Sky with its own “triple play” offering covering TV, home phone and broadband. Some experts believe a low-cost BT wholesale offer to pubs and clubs could hit Sky’s margins.

Third-quarter figures were boosted by users signing up for new products such as on-demand downloads and Sky Go mobile services.

It said it had seen a five-fold increase in on-demand television downloads and a 37 per cent jump in movie rentals against last year.

The group did not provide separate figures for its online service Now TV – launched last year to compete with the likes of Lovefilm and Netflix – but said it was “very pleased” with its growth so far.

Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said: “Despite intensifying competition, Sky continues to prosper.

“Whilst the group’s lead position is now under attack from the likes of BT, the possible loss of its king-pin status still looks some way away.”

Sky’s shares edged up 6p or 0.7 per cent to close at 851p after its figures beat the market’s expectations.