BSkyB posts bumper profit

BSkyB posted profits close to £1bn in the nine months to 31 March – a reminder to embattled firm News Corp of why it was so keen to take full control of the broadcaster.

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The pay-TV group, which is currently under increased scrutiny from media watchdog Ofcom after the phone hacking scandal at News International – owned by shareholder News Corp – used its trading statement today (2 May) to state that it remains a “fit and proper licence holder”.

This comes just a day after a select committee of MPs stated that Rupert Murdoch, News Corp chairman and CEO, was not a “fit person” to run a major international business – although four Conservative MPs in the group disagreed.

In an e-mail to News Corp staff, Murdoch responded by saying the report had offered the “unique opportunity” for the company to reflect on its mistakes and “further the course [it] has already completed” to rectify them – although he admitted it had been “difficult to read”.

Ofcom says it is taking the committee’s report into account as it looks to decide whether News Corp is a “fit and proper” shareholder of BSkyB. It has the power to revoke BSkyB’s broadcasting licence or to force News Corp to significantly reduce its 39% shareholding in the company.

BSkyB says: “The company is engaging with Ofcom in this process and continues to believe that it remains a fit and proper licence holder, as demonstrated by its positive contribution to UK audiences, employment and the broader economy, as well as its strong record of regulatory compliance and high standards of governance.”

Profit at the broadcaster rose 25% to £939m in the nine months to 31 March, on the back of a 5% revenue rise to £5.1bn.

BSkyB added 78,000 new households in the third quarter, boosting its total subscriber base to 10.55 million. Its churn rate in the three months to March was down 0.3 percentage points to 10.1%, while average revenue per user grew by £9 year on year to £546.

Jeremy Darroch, Sky chief executive, says: “The decision to focus our marketing on home communications has paid off with the fastest quarter of growth since launch and confirmation that Sky is now Britain’s favourite triple play provider.”

Marketing costs fell 11% to £797m in the period, due to the closure of its customer magazinesand a reduction in above the line advertising costs.

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