BSkyB profits, marketing costs rise

Earnings Brief

LONDON — Rupert Murdoch-backed U.K. satcaster BSkyB posted its biggest quarterly profit in almost two years as the company added 95,000 subs, more than analysts predicted.

Net income for the third fiscal quarter, ended March 31, was £119 million ($226 million), up 5.3% from a year ago. Revenue grew 9% to $1.94 billion.

BSkyB now has 7.7 million subscribers and hopes to reach 8 million by the end of the year.

Satcaster also announced impressive figures for the take-up of its personal video service Sky Plus, which added 128,000 new households, bringing the total to 770,000.

“Continued focus on the implementation of our strategy is returning strong subscribers growth, a good mix of customers, growth in Sky Plus and substantial profit and cash flow,” CEO James Murdoch said.

Average spend per customer dipped slightly to $649, although Murdoch’s strategy, in contrast to that of predecessor Tony Ball, is to increase the number of subs rather than fret too much about cost.

Summer’s marketing campaign seems to have paid off for BSkyB — though the effort is also reflected in a 27% rise in marketing costs to $721 million for the nine months ended March 31.

There are two looming concerns, however. One is the continued growth of Blighty’s digital terrestrial platform Freeview, now in more than 5 million homes. While Sky owns a stake in the service, analysts are concerned that it will suck subs away from BSkyB.

Murdoch must also address the disappointing perf of flagship entertainment web Sky One.

In a conference call to analysts, Murdoch said, “Sky One ratings in January, for the launch of the winter schedule, were lower than I had hoped for some key shows. However, (Sky One) remains in line with key performance indicators internally.”

The winter season featured high-profile U.S. shows including “Rescue Me,” season four of “24” and the second run of “Nip/Tuck.”