BSkyB Hails Strong Start But Warns On Economy

The chief executive of BSkyB (LSE: BSY.L - news) , the pay-TV and home communications firm, sought to temper optimism on Thursday about a broad economic upturn as the company hailed a strong start to its financial year.

Announcing results for the three months to September 30 which included a 7% year-on-year revenue increase, Jeremy Darroch said the UK consumer environment "remains challenging".

The revenue rise to £1.84bn was slightly ahead of analysts' expectations, while the company's operating profit fell 8% from £310m in the first quarter of the 2012-13 financial year to £285m this time.

Earnings before interest, tax, depreciation and amortisation were flat at £392m.

BSkyB, the owner of Sky News, said it had seen strong growth across its product base, including a net rise in broadband customers of 110,000, helping it to cross the five million customer threshold for the first time.

That came despite intensifying competition in the broadband market from rivals such as BT Group (LSE: BT-A.L - news) .

In total, the company saw 800,000 new paid-for subscription products during the quarter, a 50% increase on the prior year and an indication that BSkyB still possesses significant growth potential across many of its products.

The City had anticipated the decline in operating profit because the quarter included the first instalment of the new live Premier League football contract (£220m per year more expensive than the previous one), as well as a chunk of a previously-announced investment in new services for customers.

During the three month period, Sky Sports has seen viewing figures for the first 23 live games rise by 20% compared to the equivalent number of fixtures last season.

Mr Darroch said: "We have made a very good start to the year... (and) were particularly pleased with the continued strong performance in home communications.

"Quarterly growth in broadband was up on last year taking us past the five million customer milestone.

"In all, 36% of customers now choose to take all three of TV, broadband and telephony from Sky, over half a million more than last year.

“We are making excellent progress against the plan we set out in July to accelerate growth and returns from new services.

"The number of connected Sky+HD boxes grew by almost 50,000 a week, faster than in any previous quarter, and we are seeing an immediate increase in usage as customers get connected."

He added: "While the consumer environment remains challenging, we are well placed as we execute a strong set of plans for the rest of the year."