BSkyB over-delivers, as usual

BSkyB has a cheeky habit of under-promising and over-delivering on its results. It isn’t such a bad habit, but often catches out the analysts. Sky’s half-year numbers, revealed on January 31st, declared 6 per cent revenue growth to £3.4 billion, EBITA growth up 16 per cent and Earnings per Share up 20 per cent.

Hard subscriber numbers were a little more variable. TV subscriber (net additions) were up 40,000, and total household additions up 100,000. Broadband only subs grew 60,000, with Multi-room additions up 55,000 and HD subs up 138,000 to 4.06 million. Churn was down impressively to 9.6 per cent.

The bottom line, therefore, showed operating profit up 16 per cent at £601 million. Sky’s total RGUs now top 26.8 million, while TV subs stand at 10.471 million. 29 per cent of Sky’s customers are now triple play (TV, phone and broadband), up from 24 per cent in the same period a yearago.

Sky will offer a new pay TV service via broadband from mid year. “Sky intends to initially offer access to Sky Movies on demand with no dish and no contract, and is designed to address the Netflix/ Lovefilm and YouView unbundling threat. No details as yet on pricing, but films (and eventually sport) may be offered on a pay as you go, monthly or other flexible billing basis. In our view, a positive move to broaden the revenue base but it may fuel fears of spin down and customers unbundling from Sky,” says Morgan Stanley in a note to clients.

The bank’s report says that this move sees Sky squaring up to the perceived threat from the likes of LoveFilm and Netflix. “Sky will be able to top offer a competitive service on YouView. This could go either way. It is an opportunity for revenue expansion on a quasi fixed programming cost base, but the market is likely to worry about potential spin down from core Sky TV customers.”

 

 

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