BSkyB taps High Definition demand and signs HBO deal
LONDON (Reuters) - Pay-TV firm BSkyB (BSY.L) added 90,000 customers in the fourth quarter on surging demand for high definition services, and sees new American dramas fuelling growth ahead of a possible takeover.
BSkyB said it would become the home for programming from the U.S. HBO channel and develop further HD channels as it seeks to attract further subscribers in what is likely to be a tough economic environment.
BSkyB said it would also carry on with "business as usual" while its largest shareholder News Corp (NWSA.O) considers whether to make an offer for the 61 percent of the company it does not already own.
"There's no offer on the table, News Corp have got to work through a regulatory process," Chief Executive Jeremy Darroch told reporters. "The management team are entirely focussed on what is going to be a great year for Sky."
The strong finish to the last financial year was driven by demand for HD, with some 429,000 customers signing up to the service which has proved popular with sports and movie fans, helping to take the overall customer base to 9.86 million subscribers.
The new signings means that 30 percent of the Sky total customer base are taking HD, helping to take the average revenue generated per user to a new high of 508 pounds. One in five Sky customers take TV, broadband and telephony, which is also up strongly on last year.
Churn, or the percentage of customers who dropped the service, was the only low point in the results at 10.5 percent compared with a forecast of 9.9 percent but Darroch said he was happy with the overall trend.
The strong operating performance meant that full-year revenues grew 11 percent to 5.9 billion pounds and adjusted operating profit was up 10 percent to 855 million pounds, both in line with forecasts.
The full-year dividend was increased by 10 percent, meaning it has now doubled in the last five years.
Numis analysts said the operating performance was impressive and pointed out that the financial figures were in line with forecasts despite the extra costs of delivering the more than expected HD boxes.
"We retain our view that News Corp will complete the acquisition of BSkyB for around 800 pence in 2Q10 and therefore our recommendation remains add," they said.
News Corp has proposed to buy BSkyB for 700 pence per share, or a total of $12 billion (7.7 billion pounds), but BSkyB's independent directors have demanded an offer of over 800p. The two sides have put price negotiations on hold while they seek regulatory approval.
Shares in BSkyB, which often beat market forecasts on its quarterly results, were down 0.5 percent to 716.5 pence in early morning trading.
"These are good results and the focus on delivery is to be applauded," Citi analysts said in a note. "There is no doubt in our mind that Sky is increasingly becoming a 'jam today' story.
"However, the short-term focus is on the likelihood and timing of a deal, and on this there is nothing new in the results. We remain positive on the stock, but don't expect the results themselves to be a specific catalyst."
(Reporting by Kate Holton; Editing by Paul Sandle and Simon Jessop)
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