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BSkyB profit slides
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August 11, 1999: 4:27 a.m. ET
Pay-TV operator's profit slumps 75%; cost of digital service weighs
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LONDON (CNNfn) - Pay-TV operator British Sky Broadcasting unveiled a steep slide in earnings Wednesday, with the cost of switching customers to its new digital service weighing heavily on profits.
In the 12 months to the end of June the company earned 72.6 million pounds ($118 million) before tax and one-time items, a slump of 75 percent compared to the previous year. Earnings per share before one-time items came in at 2.6 pence, compared to 14.5 pence a year ago. Group revenue rose 8 percent to 1.545 billion pounds.
Analysts had predicted a profit number of between 62 and 84 million pounds. The company had previously announced it would take a charge of 315 million pounds to cover some of its expenditure on the new digital service. Much of that went to migrate subscribers from its existing analog service.
BSkyB spent 215 million pounds on marketing as it tries to attract subscribers to its new digital satellite offering.
Competition for subscribers is fierce, with consumers being offered a number of different platforms to watch the next generation of broadcast services, including interactive television.
BSkyB, and chief rival, terrestrial digital provider On Digital, have both offered to give away set-top decoders worth some 200 pounds in an effort to speed up the rate of new subscriptions.
BSkyB reported Wednesday that it has signed up 1.21 million people to its digital service by the end of July, but only 515,000 of those subscribers are new customers. Breaching the 1 million target was achieved two months ahead of schedule, the company claimed, and it reported that subscriptions leaped ahead in July when it began offering the free decoders.
BSkyB, which is 40 percent-owned by Rupert Murdoch's News Corporation, has been the subject of persistent merger speculation. Europe's largest pay-TV company, France's Canal Plus (PAN), and its parent Vivendi (PEX) have built a 24.5 percent stake in the group. Merger talks between Canal Plus and BSkyB were called off earlier this year when the two sides could not agree on the issue of management control.
British newspaper reports suggested this week that BSkyB could attempt another investment in a listed soccer club. A $1 billion attempt to take over Manchester United (MNU) was blocked by regulators earlier this year, but the reports indicated BSkyB could turn its attention to buying a minority stake in rival Leeds Sporting (LES).
-- from staff and wire reports
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