BSkyB says on track despite difficult environment

By Kate Holton

LONDON (Reuters) - Pay-TV firm BSkyB met forecasts with 56,000 net new customers in the third quarter and said it was on track for the full year despite a tough consumer environment.

Shares in the group rose 2.6 percent on the news to 554.5 pence, with analysts describing the results as reassuring.

"We are on track for our target of 10 million customers in 2010," the group said.

Churn, or the percentage of total customers who dropped their subscription, at 10.5 percent was the lowest for the third quarter for four years, while the average revenue per user increased to 424 pounds, which was ahead of forecasts.

"These results help to confirm our view that Sky's multi-product offering continues to drive growth in the Pay TV business," ABN Amro analyst Justin Diddams said in a note to clients.

"We recommend using any near-term share price pressure to buy the shares ahead of 2009 when profitability is expected to bounce and where the impact of additional product is likely to become even more pronounced.

BSkyB launched a broadband service in 2006 to increase customer loyalty and Chief Executive Jeremy Darroch said the approach should put them in a good position if customers look to save money by taking their TV, telephony and broadband from one provider.

He said there was also scope to sell more products to existing customers.