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Sky Digital service takes off
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February 10, 1999: 7:40 a.m. ET
BSkyB says sales at new digital TV service ahead of targets
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LONDON (CNNfn) - British Sky Broadcasting Group's stock soared more than 9 percent Wednesday as its new Sky Digital TV service beat forecasts and the company set a new target of one million digital TV subscribers by October.
But in the six months ended Dec. 31 its pretax profit plunged 58% to 53.2 million pounds ($86.9 million), due to start-up costs for the new service.
BSkyB, 40-percent-owned by Rupert Murdoch's News Corp. (NWS), said its 140-channel Sky Digital service had signed up 350,000 customers in its first four months of operation, well above its target of 200,000.
"Sky Digital is off to a superb start, said Mark Booth," chief executive of BSkyB. He said 120,000 of those subscribers were new - as opposed to carryovers from the company's analog service.
In total, Sky is now in 7 million homes, approximately 30% of the households in the British Isles, Booth said.
BSkyB's (BSY) sales for the six months ending in December rose 9 percent to 753 million pounds ($1.23 billion) in the first half compared to the year-earlier period. But that was more than offset by a 117 million pound increase in costs, to 645.8 million pounds, as it stepped up spending on both programming and distribution
Booth said the sales growth was expected to continue. "Given the fast take-up rate, combined with subscriber satisfaction, which scores 25% higher than for the analog service, we are targeting 1 million homes to be subscribing to Sky Digital by October."
BSkyB also announced a marketing alliance with America Online. BSkyB will supply content to AOL including the Sky Sports web site and AOL will market Sky Digital to its customers.
BSkyB's interactive TV venture, Open, will start providing home shopping and banking services this spring. U.K electronics retailer Dixons and catalog shopping company Argos will sell goods on the service.
BSkyB's shares jumped 45 3/4 pence to 452.
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