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Last Updated: Wednesday, 12 May 2004, 14:25 GMT 15:25 UK
BSkyB holds on to football rights
Manchester United vs Chelsea
Live Premiership games will now only be on Sky
BSkyB has said rival broadcasters will not be allowed to show any English Premiership games live because their bids for the rights were too low.

The satellite broadcaster had agreed to sub-license the rights for six to eight games for the next three seasons.

But the prices offered fell short of the reserve price agreed with the European Commission, BSkyB said.

BSkyB also announced pre-tax profits for the January-to-March period had more than quadrupled to 155m ($273m).

In the same period last year the firm made a profit of 36m.

Advertising boost

The company said that higher prices, coupled with a strong schedule of sports events - such as the Champions League quarter-final between Chelsea and Arsenal which got three million viewers - had boosted profits.

It added that earnings were also lifted by advertising revenues, which continued to outperform the market with a 9% increase on a year earlier to 223m.

The result means that pre-tax profits for the first nine months of BSkyB's financial year have reached 359m, up from 49m a year ago.

Sky had been trying to auction off the rights for six to eight games in England's top football league to another broadcaster, in a bid to calm European Union competition concerns.

However, none of the bids matched a reserve price set by the broadcaster and agreed by the EU.


The BBC said it had not made an offer for the games, as part of the deal was that the matches remained encrypted - a practice the corporation halted in 2003.

The EU said it was disappointed with BSkyB's announcement.

It warned that BSkyB would not be allowed a monopoly on live Premiership games when the company's new three-year deal expires in 2007.

An EU spokeswoman said: "We all like football and we like to see football on television, preferably on free-to-air television so that we don't have to pay for it. Obviously we are very disappointed."

Sporting chance

The EU had voiced fears that the group had a monopoly on UK premier league matches.

In October, its Competition Commission criticised a new deal between the Premiership and BSkyB which saw the broadcaster snap up the rights to show live games until 2007.

The attack came despite the Premiership changing its auction process - splitting its single rights package into four blocks.

The move had been an attempt to assuage EU fears that the old arrangements favoured large media buyers, limiting consumer access to top-flight football.

But BSkyB still managed to win the rights to all four packages.

Despite the profit surge, BSkyB's third-quarter results showed that the rate of subscriber growth has slowed, with a net 66,000 subscribers added during the three months.

The company said the slower growth reflected its decision to rein in spending on marketing "in a seasonally quiet period".

Sky viewing card
Subscriber growth has slowed
The figure is lower than the 100,000 it is estimated BSkyB needs to attract each quarter if it is to hit its intended target of eight million subscribers by December 2005. The broadcaster currently has a total of 7.27 million.

However, BSkyB said a new campaign launched at the end of March would boost figures for the current quarter and it remained "on track" to meet the eight million total by the end of 2005.

Reaching the target

But analysts noted that BSkyB chief executive James Murdoch gave no indication as to the strength of subscriber growth in recent weeks.

Mr de Larrinaga told Reuters that investors were unhappy with "the absence of a clear strategy" on how the firm will reach eight million subscribers.

He added: "Of course they can hit the targets, but how much will it cost?"

However, Investec analyst Kingsley Wilson said the slowdown in growth was nothing to worry about.

He said the third quarter of the year is traditionally the slowest for BSkyB but if it "markets aggressively" it could claw back subscribers "reasonably quickly".

If overall subscriber numbers were disappointing, there was better news from BSkyB's upgraded set top box service Sky Plus.

Pay package

Subscriber numbers for the service grew 72,000 to 322,000 - achieving its initial target of 315,0000 customers three months early.

BSkyB also unveiled an annual pay deal worth almost 1m a year for new chief executive James Murdoch.

Under the 12-month rolling contract, Mr Murdoch will take home an annual wage of 750,000 - subject to annual review.

On top of that he will also have access to a yearly relocation and expenses allowance of 200,000 for three years.

The chief executive could also land a further annual bonus and 450,000 shares in BSkyB - a holding that could net him 2.87m - if customer and earnings growth targets are met.

The company declined to comment on the size of a possible bonus, but did say it would be capped at 1.5m.

The three-year deal also includes pensions and medical insurance.



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