* First-half financial results beat forecasts
* To roll out online sports as core growth slows
* Shares up 1 percent after 21 pct rise in a year
By Kate Holton
LONDON, Jan 31 BSkyB will offer its
popular sports channels online for a daily fee, seeking new
customers to offset slowing growth at its core pay-TV service
amid sluggish consumer spending.
Sky, Britain's dominant pay-TV group which provides
fixed-line telephony, TV and broadband to 10.7 million
households, has adapted its strategy during the economic
downturn after years of chasing new subscribers to its core TV
The group added 25,000 subscribers to its pay-TV service in
the three months to the end of December, well down on the more
than 100,000 users it used to routinely add each quarter.
In response, it has focused on selling more products such as
high definition TV and broadband to existing customers, and
moving online to reach those not willing to sign up to a monthly
contract. The approach has enabled the group to consistently
post strong financial results and pay higher dividends.
"Although we expect the consumer environment in 2013 to
remain challenging, we have a strong set of plans for the year
ahead," Chief Executive Jeremy Darroch said on Thursday.
Darroch said the group would offer its sports channels,
which show everything from Premier League soccer to Formula One
motor racing and cricket, on its new online service called Now
TV in the next few months.
Viewers, who do not need to sign up to a contract, will be
able to pay 9.99 pounds to watch all six Sky Sports channels for
24 hours. It has already shown movies via the online offering to
25,000 customers since its launch last year.
The new internet drive will help BSkyB compete with existing
online services such as Lovefilm and with BT Vision,
which has won the right to show its own sports content, but it
is also having to bet that its existing customers will not
downgrade to the cheaper online offering to save money.
The group's performance in the first half of the year showed
that, despite the pressures on consumer spending, customer
loyalty had remained relatively solid, with subscribers spending
on average 568 pounds a year, up 24 pounds on the year before.
"Net additions were slightly below our estimates reflecting
the tough consumer environment," analysts at Numis said. "(But)
encouragingly, take up of new products continues to increase,
driving customer satisfaction and loyalty."
Those customers taking all three main services - TV,
broadband and telephony - accounted for 33 percent of the user
base, up 4 percentage points year on year.
The rise in customers helped the group to post first-half
operating profit up 8 percent to 647 million pounds ($1 billion)
against a forecast of 632 million pounds. Cost control helped
the group pay an interim dividend up 20 percent to 11 pence.
"We believe the BSkyB investment case has evolved over the
past year or so, with the challenging consumer environment
making the addition of new households to the (pay-TV) service
more difficult," Numis said.
"The group has rightly prioritised the increased penetration
of multiple products, notably HD and broadband, which drive
average revenue per user and reduce churn over the medium/long
term. We are supportive of investment in products such as Now TV
which offer an attractive risk/return in our view."
Shares in BSkyB were up 1 percent to 819 pence in
mid-morning trade, following a 21 percent rise in the last 12
months, and valuing the group at 13.2 billion pounds.