LONDON — James Murdoch’s turbulent first year at the helm of Blighty satcaster BSkyB was vindicated Tuesday with an impressive set of figures for the six months ended Dec. 31. Subscriber growth surged to 7.6 million, defying analyst expectation.
The satcaster is virtually guaranteed to meet it target of 8 million subs by the end of the year as 192,000 new customers came onboard the Sky train in the last quarter of 2004.
Overall, BSkyB, under pressure from the success of the Freeview digital terrestrial platform in which it has a stake, added 400,000 subs in 2004.
Murdoch fils said that it was the first time BSkyB had generated £1 billion ($1.8 billion) in revenue in a single quarter. But he conceded that the company was spending around $414 to add a subscriber compared with $373 a year earlier.
Shares rose in marked contrast with the summer, when disappointing sub growth and news of high levels of investment sent BSkyB’s share price plunging.
Profits grew by 25% to $627.2 million, while earnings grew 10% to $3.5 billion.
Another piece of good news for Murdoch’s strategy, underpinned by a heavy marketing drive in the run-up to Christmas, was the high take-up of personal video recorder box Sky Plus. The number of Sky Plus boxes in U.K. homes grew by 35%, an increase of 168,000 to 642,000.
Also encouraging was the amount of coin BSkyB extracted from each subscriber — an average of $695, close to the $720 target.
Murdoch denied Freeview was a threat, and he repeated his view that 80% of U.K. homes will ultimately hook up to pay TV services.
“Digital free-to-air and analog free-to-air viewers behave in the same way,” he said. “Free digital viewers will exceed the number of pay TV subscribers for a time just as terrestrial homes exceed where we are today. ”
He reckoned BSkyB would still hit its target of 10 million U.K. homes by the end of 2010, two years before the country’s planned switch to digital.
Asked about the dispute over how much ITV, Blighty’s most-watched private web, should pay BSkyB for carriage — the subject of a complaint by ITV to U.K. regulator Ofcom — Murdoch said: “Our charges are fair, reasonable and nondiscriminatory.”
He was tight-lipped about BSkyB’s free digital satellite service Freesat, launched in October. He said it had been a soft launch and that it was too early for any meaningful numbers.