BSkyB reported its highest level of new customers for five years in a sign that hard-pressed consumers are choosing to stay in and spend more on home entertainment.
The company announced a better-than-expected hike in net customer additions in its fourth quarter, at 92,000, taking total customers to 8.98 million. Customer loyalty - those leaving the group - fell to 9.8 per cent, down from a peak of 13.7 per cent the previous year.
BSkyB is now close to achieving its 2010 target to reach the 10 million customer mark. The broadcasting giant said full-year revenues rose by nine per cent to £4.95 billion as it picked up new customers and boosted average revenue per user, from £424 to £427 in the three months to the end of June.
However, the firm also posted a two per cent drop in adjusted operating profits to £752 million in the year to June 30, recording a £616 million hit on its 17.9 per cent stake in ITV, which Sky must now sell-down after a government ruling based on competition rules.
As ITV’s shares are now worth less than a third of the 135p paid by Sky when it bought the stake for £940 million in November 2006, and the write-down has almost doubled from an initial £343 million estimated charge. Sky has appealed the ruling to sell-down the shareholding.
The firm’s profits have also been impacted by the additional cost of its new Premier League football contract, further investment in broadband and telephony, and pressures on ad revenues. It spent £184 million on Sky Broadband, Sky Talk and network service provider Easynet during the year.
Sky plans to cut spending on areas such as consultancy and travel and through a number of redundancies, announced in April.
Jeremy Darroch, chief executive, said: “We have continued to grow strongly in a more difficult consumer environment. More customers are choosing Sky for a broader range of products and are staying with us for longer.”
Media analysts at Numis Securities warned that despite the results the broadcaster might yet suffer amid the economic downturn.
“We expect the existing subscriber base of BSkyB to hold up well despite increased economic pressures. However, we believe that new subscribers will be more difficult to come by,” a Numis note cautioned.