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Wednesday, August 12, 1998 Published at 10:15 GMT 11:15 UK

Business: The Company File

Digital dents Sky profits

Sky says profits are down but the number of suscribers is up

Satellite broadcaster BSkyB's profits have taken a dent as the group prepares for the launch of its digital TV service this autumn.

BskyB digital is due to go out on air on October 1, with a basic programme packages starting at £6.99 a month.The family package will cost £11.99 a month.

The actual Sky Digital systems will be available for £199.99 for new customers and £159.99 for existing customers. Installation will be free.

Digital television will also be available later in the year on terrestial television - although a set top box will also be needed.

Costly launch

The cost of paving the way for the multi-channel service meant that BSkyB profits fell 14% to £270.9m.

Sky's pricey Premier League football contract also contributed to the decline. Sky has the rights to live broadcasts of all matches.

[ image: Brave new world of digital TV]
Brave new world of digital TV
Sporting rights now account for 42% of all programming costs, up from 31% last year.

But the group stressed it had enjoyed a successful year, with advertising revenue and numbers of viewers both increasing significantly.

Growth of home satellite systems was held back by the impending launch of Digital, but cable subscriptions continued to rise.

Subscribers up

Subscribers to the satellite broadcaster now total almost seven million, a rise of over half a million on last year.

Chief executive Mark Booth said: "Sky will introduce digital television to the United Kingdom - digital services at an affordable price with programming that will appeal to everyone.

"It will transform the television experience for millions of people and digital will bring a new dimension to the industry."

Two thousand telephone operators are being trained at the group's customer management centres and 1,200 installers are being recruited and trained to meet the expected demand.

[ image: The cost of sporting rights has increased for Sky]
The cost of sporting rights has increased for Sky
Set-top box manufacturer Pace is now in production and BSkyB anticipates at least 200,000 of the boxes needed to receive digital satellite TV will be with retailers before Christmas.

The group has also reached agreement with seven consumer electronics companies to develop TV sets able to receive digital satellite TV without any extra set-top equipment.

In the year to June 30, BSkyB made £270.9m before tax on £1.43bn turnover.

This compares with £313.7m on £1.25bn during the previous 12 months.

One reason for the healthy 15% rise in turnover was an improvement in advertising revenue which grew by almost a third to £195m.

The total dividend for the year has been maintained at 6p.

BskyB is Britain's most profitable television company. Its largest shareholder, with a 40% stake, is media tycoon Rupert Murdoch. His other interests include Fox Televsion in the USA and News International, owner of the Sun and Times newspapers.

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