from the guardian
http://www.theguardian.com/media/201...er-league-deal
Mark Sweney
theguardian.com, Thursday 30 January 2014 07.54 GMT
Premier League: Tottenham Hotspur v Manchester City
BSkyB's profits have been dented by the cost of its three-year £2.3bn Premier League deal. Photograph: Joe Toth/BPI/Rex Features
BSkyB has reported an 18% fall in pre-tax profits to £527m in the six months to the end of December, as investment in new services and Premier League rights costs incurred in its battle with BT Sport hit the broadcaster.
The company's adjusted operating profits, the measure of profit most closely watched by analysts and investors, fell by 8% year on-year to £595m.
Total revenues grew by 6.3% to £3.75bn as the company hailed a strong performance in the runup to Christmas.
Jeremy Darroch, the chief executive of BSkyB, indicated that BT's push in to Premier League football had not hurt the company, with viewing of Sky Sports at a six-year high.
"It has been a noisy period in terms of competition but you can see across the board our business is continuing to power ahead," he said.
"Our financial performance was strong in the first half and we remain on track for the full year. We are moving through a year of investment in which we are absorbing the one-off step up in Premier League costs well."
BSkyB, which on Wednesday unveiled a five-year deal with HBO to secure the future of hit shows such as Boardwalk Empire, reported strong customer growth across the board.
The company added 77,000 TV subscribers in the quarter to the end of December – the broadcaster includes sign-ups to its Now TV online service in this figure – taking its total TV customer base to 10.5 million. This was the strongest quarter in three years.
Broadband subscribers, the focus of its battle with BT Sport, grew by 110,000 to 5.1 million in the last three months of the year.
Investors are keeping a keen eye on the company's churn rate, the proportion of customers that leave Sky, to gauge the impact of BT's deep-pocketed spending on building its TV service.
Churn was 10.8% across the six months to the end of December, up 0.5% over the same period last year, but actually down 0.2% in the final three months of the year.
There has been speculation that BSkyB might need to add a mobile offering to boost its range of products to customers, either by launching its own service from scratch or doing a deal with an existing operator.
When asked about a potential deal with Vodafone, Darroch did not explicitly deny that talks had taken place, but said that speculation of a merger or acquisition were "wide of the mark".
"We talk to lots of different companies about lots of things, it is part of the ecosystem of the market," he said. "I'm not going to provide a running commentary [on our plans]. The speculation I've seen in the press is wide of the mark, I'll leave it at that."
Darroch admitted that the prospect of a move into mobile has been something BSkyB has looked at, and he hinted the company may make a move into the sector, but that it was not "imperative" to its plans.
"Mobile has been something that we have looked at from time to time and over the sweep of time I wouldn't rule it out," he said. "We stay focused on portability of content. If we see an opportunity at some point we would be open to that. But it is not an imperative for the business."
Darroch also addressed the issue of bidding for the next three-year Premier League TV rights deal, which is expected to kick off later this year.
BSkyB was forced to pay £2.3bn to stop BT from securing the lion's share of matches in the existing deal, a 40% increase, and with further inflation a certainty in the next auction Darroch warned that there is a limit to how much rights are worth.
"Of course the Premier League is an important set of rights, we get that, we will go in with a clear view of what we seek to achieve. Whenever [the auction] arrives we will be ready and in good shape for the process. With any set of rights there is a price beyond which we don't think it provides value. That was the case with the Champions League [which BT secured]. It accounted for just 3% of viewing and there were better ways [to invest]."
The company saw huge growth in its premium paid-for service Sky Go Extra, which allows customers to register up to four devices and download TV and movies to watch offline for £5 a month, with 258,000 new subscribers in the final quarter. Total subscriber numbers hit 643,000.
"We had a very good first six months of the year as we reaped the benefits of our broader-based approach to growth," said Darroch. "In a consumer environment that remains challenging, customers continued to choose to take Sky products in ever greater numbers in the runup to Christmas."
The company said that usage of its on-demand services has trebled and the number of movie rentals through its Sky Store service doubled.
Average revenue per user, a key statistic watched by analysts, grew by £11 in the final quarter to £570.
The proportion of subscribers taking three products from Sky remained flat quarter on quarter at 36%.
Sky also said that it has reached six long-term sports rights deals including the 2017 British & Irish Lions tour to New Zealand; Super League rugby for five years from 2017; a five-year deal with wrestling giant WWE from 2015; a seven-year deal for live cricket from New Zealand, including two England winter tours; and a four-year deal with the SFA starting next year for the Scottish Cup and international friendlies.
BSkyB's share price fell 2.6%, 22.5p, in early trading to 844p
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