Strong Q3 from Sky

BSkyB’s third quarter results show strong demand in what the satellite broadcaster called “a challenging consumer environment”. The company reported total product growth of 801,000 in the quarter, with over 10.1 million customers with 51,000 net additions in the quarter.

Total HD customers were 47 per cent higher than the prior year at 3.7 million, with 543,000 net additions in home communications in the quarter; 3.2 million households now choose Sky’s broadband offering, with 26 per cent of customers now taking all three of TV, broadband and telephony.

Group revenue increased by 14 per cent to £4.83 billion (2010: £4.23 billion) with growth in all major business areas. Retail subscription revenue grew by 14 per cent to £3.99 billion (2010: £3.52 billion) reflecting the success of the company’s multi-product strategy and a larger customer base.

Wholesale subscription revenue was 34 per cent higher at £236 million (2010: £176 million) as a result of increased take-up of premium channels on cable as well as the acquisition of Living TV.

Operating profit rose 4.8 per cent to £261 million from £249 million on the back of a 13 per cent rise in revenue to £1.65 billion from £1.46 billion. Third quarter net profit dropped 39 per cent to £174 million from £286 million a year earlier, when the figure was boosted by sale proceeds from a forced divestment of its stake in UK terrestrial broadcaster ITV PLC.

Jeremy Darroch, Chief Executive, commented: “The business has delivered another good performance in what has clearly been a tough consumer environment and we are benefiting from the transition to more broadly based growth. Good progress on multiple fronts is translating into strong financial results with double digit growth in revenue, profit and cash flow.

At a time of significant pressure on household budgets, we have added over 800,000 subscription products as more customers choose Sky for a greater variety of services. Take-up of high definition remains very strong and we have had another excellent quarter in home communications, with 26 per cent of customers saving money by taking all three of TV, broadband and home phone.

The strength of our financial performance has been equally broadly based, with good revenue growth across retail, wholesale and advertising. Strong cost control and continued margin expansion has delivered 24 per cent growth in operating profit and free cash flow is up 60 per cent.

Customers are choosing Sky for a better choice of television and 2011 is shaping up to be our best year yet on screen. Our new channel, Sky Atlantic, has got off to an excellent start with 10 million viewers in the first two months. Alongside Sky 1 and Sky Living, it forms part of an outstanding entertainment line-up that will bring even more value to customers in the months ahead, including a growing commitment to UK drama and comedy.”

In respect of the proposed News Corporation acquisition of the 61 per cent of the company it doesn’t already own, the company said that it would continue to co-operate with the ongoing regulatory process.

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