BSkyB said today that operating profits surged 13% to £589m in the nine months to March, while revenues jumped 7% to just under £4bn. And the big success story seems to be high-definition TV – a big advertising push and a reduction in the price of the set-top box helped to persuade nearly a quarter of a million of us to sign up to Sky+HD last quarter, taking the total number above the 1m mark for the first time. So either people are keen to watch the recession unfold in all its glory, or they’re foregoing that trip to the cinema and spending the money on TV instead. Either way, Sky’s not complaining...
Sky’s been on a big push with HD lately (our editor, a big convert to the cause, still maintains that’s because he told them to last year). In January, it slashed the price of a set-top box from £150 to £49, and it’s also been plugging the service with lots of those strangely hypnotic slow-motion close-up ads. And it seems to be working: some 243,000 people signed up for the HD service last quarter, and only about three-quarters of these were upgrades (though that's still a lot of people paying extra for a service that offers them no new content, just a slightly clearer version of something they already have). ‘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,’ grinned CEO Jeremy Darroch today. He’s actually had to hire another 750 people to cope with the demand.
All in all, Sky now beams its services – including no fewer than 33 HD channels – to 9.3m households in the UK (the 80,000 customers it added last quarter was about 20,000 more than analysts expected). About 15% of these use Sky for TV, broadband and telephony (the much-vaunted triple-play) – and more than half have signed up to the Sky+ service, which allows them to pause and record live TV. So it looks as though Sky’s additional services are not only attracting brand new customers, but also squeezing extra spend out of the current lot. Good news for Darroch.
Sky isn’t getting carried away though. Darroch suggested conditions would ‘remain challenging’ for the rest of the year, as customers continue to make ‘careful choices’ in ‘difficult times’. But he seems to be doing a good job on cost control, given that its margins were actually higher last quarter (despite the HD service being more expensive to run). And with more of us looking to get our entertainment kicks at home these days, demand for Sky’s services is unlikely to wane – particularly now it’s secured an even bigger share of the lucrative Premier League football rights.
In fact, just about the only fly in the ointment is its financially disastrous investment in ITV, which continues to bleed money (an impairment loss of £191m for the nine-month period). We still can't quite work out what it's doing there - but nonetheless, Sky continues to look a better bet than most...
In today's bulletin:
BSkyB beaming as customers flock to HD
Consumer confidence rising - but City fears EU backlash
Workers in the driving seat at Chrysler?
Why Mills & Boon is a bodice-ripping recession buster
Seven ways to improve your use of social media