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Media: “Explosive growth” in on-demand TV eases dip in first-half profits at BSkyB

09:41 30 January 2014

BSkyB has reported a surge of more than 40% in the take-up of products over its Christmas quarter.

BSkyB has reported a surge of more than 40% in the take-up of products over its Christmas quarter.

Broadcaster BSkyB sought to brush aside competition from rival BT today as it reported “explosive growth” in its on-demand TV service and a surge of more than 40% in the take-up of products over its Christmas quarter.

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The group said its advertising campaign fronted by Absolutely Fabulous star Joanna Lumley helped it notch up five million customers for high definition TV in the quarter to December 31, while it saw a record one million connected Sky+HD boxes added in the three months - nearly 11,000 a day.

Higher sports rights and content investment costs weighed on half-year underlying operating profits, down 8% to £595million, although this was better than expected, sending shares more than 3% higher.

It added another 110,000 broadband internet customers in the last three months of 2013, despite the challenge from BT, which launched its own sport channels last August offering free Premier League football if customers sign up to a broadband package.

Sky was left reeling after losing out in November on the UK rights to show Champions League and Europa League matches to BT, which paid almost £900m to show both Uefa competitions for three seasons from 2015/16.

Jeremy Darroch, chief executive of BSkyB, said the group was not prepared to pay over the odds for the rights, saying it believes there are “better ways to invest for our customers”.

It announced a new five-year deal for the exclusive rights to the entire HBO TV catalogue, which includes top US shows such as Girls and Game Of Thrones, extending its existing agreement to 2020, having also just secured a new drama pay channel with broadcaster ITV, called ITV Encore, that will launch next year.

The group declined to comment on reports suggesting it has held talks with Vodafone about adding a mobile offering to boost its defences against BT, but Mr Darroch said Sky was “open-minded” about tie-ups.

He said: “Mobile has been something that from time to time we’ve looked at - we haven’t ruled anything out but don’t see it being imperative for the business.”

BSkyB posted an 8% rise in overall adjusted half-year revenues to £3.8billion and said customers took out 873,000 new paid-for subscription products in its second quarter, up 42% year-on-year, with 3.8 million added in the past 12 months in what marks its fastest growth for three years.

It said 36% of customers now take-up so-called triple-play packages across its services, up from 29% two years ago.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said it was a “pleasing” set of results. “The breadth of the offering positions the company well on a number of fronts,” he added.

An update from BT tomorrow will be watched closely for signs of how the firm has been benefiting from its push into content.

Aside from its battle with BT, Sky has been in the takeover spotlight again recently as speculation has resurfaced over a potential new move from Rupert Murdoch to take full control of the firm.

Mr Murdoch, who owns 39.1% of BSkyB, scrapped his last takeover effort in 2011 amid opposition from the communications watchdog Ofcom and as details of the phone-hacking scandal at his now defunct News of the World tabloid emerged.

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