Sky customer growth slows as new products take priority

* Adds 177,00 new customers in Q3

* Churn ticks up, reflecting promotional market

* Nine-month revenue up 5 pct, operating profit up 12 pct

* Shares (Berlin: DI6.BE - news) down 5 pct (Adds CEO comments, analyst reaction, shares)

By Paul Sandle

LONDON, April 21 (Reuters) - Pay-TV company Sky (Amsterdam: BK8.AS - news) experienced a sharp slowdown in customer growth in the third quarter, although drama shows like The Tunnel and a new Sky Q TV platform helped it to attract 177,000 new customers.

The group, in which Rupert Murdoch's Twenty-First Century Fox has a 39 stake, focused its marketing efforts in the quarter on the launch of Sky Q, aimed at its most loyal TV customers, rather than offering bigger broadband deals.

As a result broadband net additions in Britain were 46,000, about half the level of a year earlier.

Retail customer growth of 73,000 in Germany were also down on a year earlier, and churn - the percentage of customers leaving - was up in Britain, Ireland (Other OTC: IRLD - news) and Italy and flat in Germany and Austria quarter-on-quarter.

Chief Executive Jeremy Darroch said the group had rowed back from some heavy promotional activity in Britain and he said this competitive environment would persist in the fourth quarter.

He said customer churn was only one part of the mix and the group had a bigger product offer across all markets - such as Sky Q in Britain - to help it to meet its growth targets.

"Our main focus has been on launching our new premium offering Sky Q during the quarter," he told reporters on Thursday. "We've been really pleased with the early response we've seen."

Sky (LSE: BSY.L - news) 's shares fell to nine-week lows following the results, and were down 4.5 percent at 981.5 pence by 0925 GMT.

Analysts at Jefferies said Sky's nine-month operating profit was 2 percent ahead of consensus, but underlying customer trends were weak and there was no clear positive catalyst.

Sky used Premiership soccer to become a leader in the British market. It (Other OTC: ITGL - news) has broadened its offer with more sport, premium U.S (Other OTC: UBGXF - news) . drama and original programming to increase customer numbers even though it has lost some soccer rights to rival BT .

It faces a similar change in Germany, where rights to the Bundesliga will be shared in the next auction in June. Darroch is confident the British play book can be replicated.

"We know that over time - you can see it in the UK - we have to do fresh things, so there's big opportunity in entertainment channels and box sets (and) our own commissioned content," he said.

The group reported a 12 percent rise in operating profit to 1.14 billion pounds ($1.64 billion) on revenue up 5 percent to 8.72 billion pounds for the nine months to March 31. ($1 = 0.6970 pounds)

(Editing by Sarah Young and Jane Merriman)