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Last Updated: Friday, 12 November, 2004, 16:33 GMT
BSkyB subscribers beat forecasts
Satellite dish
BSkyB says it is still on track to reach subscriber targets
Shares in BSkyB have risen 4.14% after the satellite broadcaster reported higher-than-expected new subscriber numbers in the first quarter.

BSkyB added 62,000 digital satellite customers in the three months to 30 September, beating the forecasts of analysts by up to a third.

The UK's largest pay TV company said it was on target to hit eight million subscribers by December 2005.

Pre-tax profits increased 30% to 122m ($225m) as revenues grew 11% to 940m.

Sky now has more than 7.4 million digital subscribers.

Sporting strength

BSkyB launched a new advertising campaign at the start of October to boost take-up which has slowed in the past year.

The market has been too bearish on Sky and the stock should rally on these numbers
Lawrence Peterman, Eden Group

New subscriber numbers were down from 81,000 in the final quarter of last year and 170,000 in the same period last year.

However, many analysts believed that BSkyB would only be able to sign up between 40,000 and 50,000 subscribers during the first quarter.

Performance was boosted by a strong line-up of sports programming during the period.

Sky Sports had exclusive rights to live coverage of the Ryder Cup and the Champions Trophy cricket tournament, while the channel got a seasonal boast with the start of the new Premiership season.

Average annual revenue per digital subscriber increased by 11 to 377 over the period while revenues from interactive services rose 8% to 81m.

Share rally

Sky said the number of households using its Sky Plus hard-disk recorder based system increased by 77,000 to 474,000 in the quarter.

"Sky achieved a solid set of results in the first quarter, with good sales and profit growth," said chief executive James Murdoch.

"Our second quarter has commenced in line with expectations as we begin the important run up to Christmas," he added.

Growth in BSkyB subscribers

Analysts reacted positively to the latest results, driving Sky's shares up to 554p by the close of trade in London.

Lawrence Peterman, an analyst with Eden Group, said he believed Sky's share price could rise to 700p.

"The market has been too bearish on Sky and the stock should rally on these numbers," he said.

Investec Securities said that Sky could potentially add more than 150,000 new subscribers in the current quarter on the back of a major advertising campaign.

Investor backing

At BSkyB's annual general meeting held in London on Friday, shareholders backed a controversial plan giving the company the authority to buy back up to 5% of its shares.

Some shareholders have opposed the move which is likely to result in News Corporation's stake in BSkyB rising from its current 35.4% to 37.2%.

However, independent investors backed the move in a vote - which News Corp did not take part in- by a margin of 82% of votes cast to 18%.

Speaking at the meeting BSkyB chairman Rupert Murdoch said the company was well placed to exploit the growth of pay television to an additional ten million homes across the UK.

"Other delivery systems and maybe new ones, will compete with us for these homes," he said.

"However, we are confident that we can continue to get a very large share of them."

Investment concerns

City analysts had expressed concern in August when BSkyB outlined plans to invest heavily in marketing and technology to arrest a decline in subscriber take-up.

The broadcaster's shares fell 19% after BSkyB said it would invest an additional 25m on marketing in 2005 and an extra 450m on infrastructure and technology over the next four years.

Analysts said the plans would erode BSkyB's profitability in the short term.

Mr Murdoch, appointed chief executive in November 2003, set a new target of signing up ten million subscribers by 2010.

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