Although BSkyB has taken a hit from its battle with BT, its quarterly results were better than expected. Even so, it has had to spend more on content and marketing. However, the real beneficiaries of the competition are top clubs who are likely to receive even more for televising their matches.
Although BSkyB has taken a hit from its battle with BT, its quarterly results were better than expected. Even so, it has had to spend more on content and marketing. However, the real beneficiaries of the competition are top clubs who are likely to receive even more for televising their matches.
The 8 per cent decline in operating profits to £285m over the three months to end of September was not as bad as investors had feared, sending Sky shares up sharply. Strong customer demand resulted in quarterly revenues rising 7 per cent year-on-year to £1.8 billion. However, it will pay £760m a year for three years under its new contract with the Premier League, an increase of £220m on the previous deal.
Sky added 111,000 broadband customers, taking the total number of broadband customers beyond five million for the first time. It gained 37,000 users of its television service. The numbers of viewers for its first 23 live games was up 20 per cent on last year, although that may in part reflect the attractiveness of some of the opening fixtures and a more open competition at the top of the Barclays Premier League.
Customers spent £559 each on average, slightly less than a year ago. Churn, the rate of customers leaving BSkyB, has been edging up for four consecutive quarters. Marketing costs were up 20 per cent to £321m as Sky sought to attract and retain customers.
Analysts emphasised that it was too early to judge the effect of BT Sport on Sky’s operations. BT does not report its latest results until the end of the month. However, the fact that it is offering some games on Freeview to entice new customers suggests that it is finding the competition tough.
Bids for rights for the Champions League are due next month and BT has indicated that it may enter the running and challenge current UK rights holders ITV and Sky. The cost of these rights have not changed since 2008, but if BT makes a bid, the price is likely to be forced up to the benefit of top clubs.