BSkyB: “Zero net DTH adds for Q3”

skybuttonBSkyB’s net DTH subscriber additions are likely to be close to zero when their numbers are announced early on May 2nd: that’s the buzz among analysts. This would be the first time that the broadcaster has not shown subs progress in a quarter’s trading. One bank report suggests there might even be a fall in the numbers.

The suggestion is that a combination of recession and market saturation has seen BSkyB now very much in a plateau phase, and focusing very much on improving ARPU and expanding its overall customer portfolio via new revenue-generating products. These expansion products include its broadband service, Sky Talk telephony service and ‘Now TV’ on-demand service.

Indeed, it is these very Now TV connections that will from this week on be added into Sky’s core subscribers numbers, and when its DTH subscriber numbers are added to Now TV clients then there WILL be a growth of around 25,000, says investment bankers Morgan Stanley in a note to clients.

Morgan Stanley analyst Patrick Wellington states: “Operationally the key feature of these numbers will be that Sky has decided not to give a figure for the number of traditional pay TV subscribers added in the quarter.  Instead we believe the company will give a combined figure for traditional pay TV subscribers and for NowTV customers. It also promises to provide commentary to give indicators on the underlying trend of development in pay TV subscribers.”

Wellington pulls no punches in saying that the market “will not warm” to the missing data. He gives as his reasons:  “(i) quarterly pay TV subscriber growth is the most constant quarterly metric that has been offered by Sky over the last 20 years, (ii) The market will assume that the absence of a traditional pay TV number will disguise the first recorded fall on record in quarterly pay TV subscribers. The company has constantly referred to the tough consumer environment in recent months. Additions in the December quarter at 25k were low for the traditionally strongest quarter of the year. In 2011/12 Sky did 40k net adds in the Christmas quarter and then 15k in Q3 and 20k in Q4. In the Christmas quarter in 2012/13 Sky did just 25k net adds. We think that Sky will be at about zero traditional pay TV adds in Q3 this year. Now TV adds are likely to be c25k in the quarter” says the bank’s report.

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