Pay-TV battle: Sky rolls out cut-price boxes

THE subscriber battle between BSkyB and BT intensified yesterday after the satellite broadcaster unveiled a £10 set-top box and promised more ways for viewers to access on-demand content.

Sky's dominance of paytoview sport is being challenged by BT. Picture: SNS

The group, which has dominated pay-TV since Rupert Murdoch launched it in 1989, plans to invest some £70 million in the coming year to improve on-demand programming and connectivity.

It is stepping up the fight with rivals including cash-rich BT, which launches its own sport channels next month in a head-on challenge to Sky’s dominance of pay-TV sport.

The new Now TV box costs £9.99 and can wirelessly connect a TV to a broadband connection, giving contract-free access to the likes of BBC iPlayer, Demand 5 and Sky News. Through Now TV, viewers can also pay to watch Sky Sports and Sky Movies.

The device will also challenge the £299 YouView box, a joint venture between BT, the BBC, ITV, Channel 4, Channel 5, Arqiva and TalkTalk which also offers on-demand TV for free.

BSkyB’s fresh assault on the market came as it announced full-year results in line with City hopes, a £500m share buy-back and an 18 per cent hike in its full-year dividend.

Total subscriptions rose 3.3 million to 31.6 million in the year to the end of June, as the group hailed a strong summer of sport, which has seen it broadcast Ashes cricket and Lions rugby, as well as Team Sky cyclist Chris Froome’s historic Tour de France win.

The average number of paid-for products per customer rose to 2.8 from 2.7, it added. Sky has just over 10.4 million TV subscribers.

Analysts at Westhouse said: “This morning’s results and accompanying commentary provide a clear reminder of BSkyB’s underlying strengths including an unrivalled content proposition, loyal subscriber base, very strong cash flow and proven marketing skills.

“We believe these characteristics will stand it in good stead when facing down growing competition for new customers, particularly from BT.”

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, added: “The spectre of BT’s current strength is looming large and despite the fact that Sky has clearly come out fighting, investors are currently favouring BT in what is becoming an increasingly compact space.”

Adjusted operating profit for the year was up 9 per cent to £1.3 billion, helped by a £29 increase in the amount customers are willing to pay for the service to an average annual amount of £577. The hike in the dividend to 30p marks the ninth consecutive year of growth.

But its churn rate – how many customers are leaving – increased to 10.9 per cent from 9.9 per cent. Sky warned that it expects the year ahead to be challenging as consumer spending remains squeezed.

Chief executive Jeremy Darroch said: “We have a strong set of plans that will extend our leadership in core areas – on screen, in home communications and in front-line service delivery; accelerate growth in new services; and improve efficiency to build a bigger, more profitable business for shareholders.”

The firm said it was expanding its Sky Go mobile TV service with a further ten channels.

It is also adding 20 channels to its catch-up TV service and upgrading its TV boxes to hold more content.

On Thursday, BT revealed it has already signed up half a million customers to its sport channels ahead of their launch – although most of these were existing subscribers.