This morning BSkyB reported forecast-busting profits of £259m for the year to June 30, a big improvement from the previous year’s loss of £127m. Admittedly the biggest difference was that its stake in ITV didn’t plummet in value quite as much as it did last year (although it’s still haemorrhaging money). But the satellite broadcaster also seems to be benefiting from our need to get our entertainment kicks at home these days: Sky signed up 462,000 subscribers during the year, its best performance for five years. CEO Jeremy Darroch may be one of the few people who’s actually quite enjoying the recession…
Last year’s swelling of the subscriber ranks (which included 124,000 in the last three months) takes Sky’s total to over 9.4m, so it’s well on track to hit its target of 10m by the end of next year. Better still, Sky is also squeezing more money out of existing customers, with its high-definition service proving a particular winner: another 530,000 people signed up for HD during the year, taking the total to 1.3m. Since all these people are paying an extra £120 a year, plus £49 for the box (reduced from £149 in January), that’s a lot of extra revenue. It’s also signed up around 58% of the base to Sky+, and its phone and broadband businesses are edging towards the black. All in all, revenues were up 7% to £5.3m, while underlying profits jumped 4% to £780m.
Sky’s ITV stake continues to be a millstone around its neck, losing another £191m in value during the course of the year – fairly small potatoes compared to the £616m charge it took last year, but still a serious drag on its overall figures (although maybe it will now be able to influence the appointment of a new CEO who can drag the share price back up). Otherwise Darroch’s major headache is the ongoing row with regulator Ofcom over the future of the pay-TV market – the latter wants to cap the prices at which Sky can wholesale its premium sport and movie channels, but Darroch argues that since Sky takes the risk (in buying all this content in the first place) it should be allowed to reap the rewards.
But generally speaking things are looking pretty rosy for Sky: the disappearance of Setanta has left it with no viable competitors in the premium space, while more and more customers are buying into the HD creed. Perhaps the only cloud on the horizon for Darroch is that the recession might soon be over, and we’ll be able to afford to start going to the pub and the cinema again.
In today's bulletin:
Sky stars as downturn Brits stay at home
Profits slump but share price rises at BT
Centrica cools but British Gas on fire
Ferrari looking backwards with Schumacher move
Organic food has no nutritional benefits, say scientists