BSkyB losses widen

July 25, 2001: 3:10 a.m. ET

Europe's No. 2 pay-TV company grows audience as revenues ahead of costs

LONDON (CNN) - British Sky Broadcasting, Europe's No. 2 pay-TV channel, said on Wednesday net losses almost tripled as it spent to build audience numbers.

BSkyB, controlled by Rupert Murdoch's News Corp. (NWS: Research, Estimates), said losses for the year to June 30 rose to £538.6 million ($764 million), or 29.2 pence per share, from £197.7 million, or 11.3p a share, in fiscal 2000.

Earnings before interest, tax, depreciation, amortisation (Ebitda) and one-time items rose 67 percent to £224 million from £134 million last year.

BSkyB and rivals such as Europe's largest pay-TV company, Canal Plus, are spending large amounts on marketing and on acquiring rights to sports events and movies to attract more subscribers, while facing increased competition from cable-TV companies.

The company, which is 36 percent owned by media magnate Murdoch, said its annual costs rose 22 per cent to £2.14 billion, while revenue grew at a higher rate of 25 percent to £2.3 billion. Annual advertising revenue increased 12 percent to £247 million.

"Our focus will remain on profitability driven by strong revenue growth and we look forward to delivering positive cash flow from the end of this calendar year onwards," said Chief Executive Tony Ball.

BSkyB's core market, digital TV subscribers, rose 1.7 million in the year to June 30 to 5.3 million, the company said.

A key measure of future profitability, called quarterly annualised average revenue per subscriber (ARPU), rose to £313, of which £11 came from interactive sales such as home shopping and betting on sports events, compared with £289 a year ago.

The churn rate, or number of subscribers quitting the pay-TV service, remained flat at 10 percent, a reduction from last year's 10.5 percent.

BSkyB's viewing share grew to 5.76 percent across UK homes, a slight increase on last year's 5.28 percent.

BSkyB shares (BSY), which have lost 44 percent of their value since the start of the year, rose 1.8 percent to 688 pence at the start of trading in London.