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BSkyB profits rise 59%

News Corp. under pressure to improve bid

U.K. paybox BSkyB continues to prosper, despite the economic downturn, according to results released Thursday.

Profits rose 59% in the six months ending Dec. 31 to £407 million ($648 million). Revenue was up 15% to $5.08 billion.

Rupert Murdoch’s News Corp., which is in the process of getting government approval for the acquisition of the 60.9% of BSkyB stock that it does not already own, will now be under renewed pressure to up its offer price.

The BSkyB board rejected an offer of $11.14 a share in June, and is now unlikely to accept less than $12.73, with analysts at Numis Securities targeting $13.15. BSkyB shares on the London stock exchange stood at $12.27 Thursday, up 1.58%.

BSkyB said it had hit its long-held target of 10 million subscribers, as it added 140,000 net customers over the three months to the end of December. It now has 10.1 million users.

Advertising was buoyant, with revenues 40% higher year-on-year at $376 million for the six-month period. However, this was largely due to the purchase of Living TV, the former Virgin Media TV Group, in July. Excluding the Living TV channels, ad rev was up 14% at $305 million.

Programming costs were up 15% to $1.67 billion, most of which was due to the acquisition of new sports rights. Marketing costs rose $120 million to $978 million. The company cut net debt by 44% to $1.5 billion.Jeremy Darroch, BSkyB chief exec, said, “Looking ahead, we are cautious on the economic outlook for 2011, while remaining very confident in the long-term opportunity for the business.”

BSkyB added 343,000 HD customers over the six months, taking the total to 3.5 million, a 68% increase year-on-year. BSkyB’s 3D channel, which launched in October, has attracted 70,000 customers.

BSkyB also announced that it had bought wireless Internet service provider the Cloud, which has 22,000 wireless hotspots in the U.K., Germany and Sweden, for under $80 million.

The company is to launch service Sky Anywhere to allow customers to access content on mobile devices, such as the iPad.

BSkyB reported 204,000 net additions to the number of broadband customers in the three months to the end of December, taking the total to just over 3 million.

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