Virgin battle hits BSkyB earnings

Profits fall 28% for the quarter

BSkyB’s long-running spat with cable rival Virgin Media has hit the satcaster’s bottom line. Net profits at Europe’s leading paybox fell by 28% to £84 million ($168 million) for the quarter to the end of September.

Virgin is refusing to carry some Sky channels, including flagship entertainment web Sky One, because of a disagreement over transmission costs. This is costing BSkyB an estimated $30 million a quarter in lost operating profit — and the spat is unlikely to be settled before Virgin’s High Court case against BSkyB next summer.

However, there was plenty of good news for BSkyB.

Investment in marketing and broadband and telephony packages, beefed up to compete against Virgin and others, including British Telecom, was also responsible for the profit slide.

But the number of new subscribers, a net figure of 83,000, and the high proportion of customers taking digital video recorder service, Sky Plus, impressed analysts.

BSkyB now has 8.665 million subscribers in the U.K. and Ireland, putting the company on target to reach 10 million subscribers by 2010.

Those taking Sky Plus increased by 14% as 323,000 customers bought into the service, for a total of 2.697 million.

CEO James Murdoch said: “We’ve seen continued good demand from customers for our entire product range, with over 1 million product sales for the fourth consecutive quarter.”

Last week, BSkyB announced that it had signed up its millionth broadband customer.

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