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Last Updated: Friday, 4 November 2005, 11:44 GMT
Customer churn hits BSkyB shares
Sky satellite dish and digital box
BSkyB has benefited from a rise in subscribers
BSkyB has said its pre-tax profits rose 13.6% to 200m ($353m) during the July to September quarter when compared with the same period a year ago.

The satellite broadcaster said profits rose after 57,000 new subscribers helped lift revenues 8% to 1bn.

But recent price hikes had also pushed up the number of subscribers cancelling their contracts, BSkyB acknowledged.

Customer desertions rose to 11.7% from 10.5% during the previous quarter. BSkyB shares fell 4.8% to 501.50 pence.

This so-called customer churn made the company the biggest faller on the FTSE 100 in Friday morning trading.

Subscribers' bills have risen by up to 3 per month, and this coming at a time when the economy appears uncertain and when competition is fierce caused the rise, the company said.

Nevertheless, BSkyB is sticking to its ambitious subscriber growth, with targets set at eight million by the end of this year and 10 million by the end of 2010, chief executive James Murdoch said.

Share dispute

Later on Friday, James Murdoch and his father Rupert are expected to go before BSkyB shareholders at the firm's annual general meeting in London, to propose a controversial share buyback scheme.

James Murdoch, BSkyB chief executive

BSkyB wishes to buy back 5% of its shares, a move which will raise parent firm News Corporation's stake to more than 39%.

BSkyB is to ask investors to approve a waiver of UK takeover rules, which would otherwise require News Corporation to launch a bid for the entire company.

The proposal is opposed by a number of leading investor groups including the National Association of Pension Funds.

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