BSkyB astounds market

Chris Forrester

BSkyB has turned in a stellar set of Q3 numbers. Some analysts were expecting a net gain of just 37,000 new subs. Sky delivered 80,000, up 43% on last year’s 56,000.

Sky’s subscriber base is now 9.31m, of which more than 1m are taking Sky+HD. High-def customers were up 243,000 net additions, and standard-def versions of Sky+ grew 406,000, taking the Sky+ population to more than 5m.

BSkyB is now transmitting 33 HD channels, which places it as the supplier of the largest number of HD channels outside of North America. 1.4m of its customers now take Sky’s ‘triple play’ offering of TV, broadband and telephony, up from 800,000 at this time last year and representing 15% of the base.

All of this success has flowed through to the bottom line, with revenues up 7% to £3.96m, profits up 13% to £589m, and generating an operating margin up 0.8% to 14.9%. BSkyB reported “strong” free cashflow of £264m, reducing its net debt to £1.67bn.

There were few downsides, but the all-important churn number was up marginally, from 10.5% (this time last year) to 10.6%. Sky said this number reflected the challenging economic climate. But ARPU was up very nicely, from £424 to £452.

“We have made a strong start to calendar 2009. In difficult times, customers are making careful choices and responding to the combination of quality and value that we offer,” said CEO Jeremy Darroch. “Over 9.3m families now choose Sky and they are taking more products from us than ever. We are progressing well against the priorities we set out in January. The combination of the long-term trend towards high definition and the launch of our new HD box strategy generated a huge response from customers. Over one million customers now subscribe to our high definition service and around a quarter of new Sky+HD customers were new to Sky. In total, almost one in five homes in the UK use Sky+ to get more from their TV viewing experience. As a result of this strong demand, we have already been able to create around 750 new jobs in our customer service and installation teams, as part of the 1,000 we announced in January.”

“At the same time as enjoying great entertainment, more customers save on their household bills when they switch their broadband and telephony services to Sky. 15% of our customers now take all three of TV, broadband and telephony, up from 9% a year ago. In little over a year from launch, we have added 673,000 line-rental customers, saving customers even more money,” he added.

“Looking ahead to the rest of calendar 2009, we expect conditions to remain challenging,” said Darroch. “In this environment, and at a time when people are spending more time at home, we will continue to provide our customers great entertainment and moneysaving broadband and telephony. At the same time, we will stay focused on cost efficiency to allow us to invest sensibly in areas that drive long-term value for the business, such as high definition, with the objective of emerging stronger from the downturn.”