BSkyB 3rd Quarter ResultsWednesday, April 30th, 2008
- Customer growth up 10%; revenue growth up 10%; on track for full year
- Net customer growth in the quarter of 56,000 to 8.888 million
- New customer additions of 289,000
- Lowest third quarter churn for four years at 10.5%
- ARPU increases to £424
- Total gross product sales of 1.2 million in the third quarter included:
- Growth in Sky+ households of 262,000 to 3.393 million
- Multiroom growth of 40,000 to 1.571 million
- HD growth of 43,000 to 465,000
- Broadband growth of 229,000 to 1.428 million
- Sky Talk growth of 180,000 to 1.095 million
British Sky Broadcasting (LSE:BSY) total product sales exceeded four million in the period, a record level of demand, and up by around 40% on the comparable period. Demand for BSkyB products remained strong among both existing Sky TV customers and new customers joining Sky. During the quarter, 42% of additions to Sky+, 24% of additions to Sky HD and 41% of additions to Sky Broadband were new customers to Sky.
Third quarter net customer additions increased by 10% to 56,000 with improved churn more than offsetting lower gross additions, which in the third quarter of the prior year benefited from the launch of “See, Speak, Surf”. Customer loyalty is benefiting from specific actions we have taken, with third quarter churn of 10.5% at its lowest level for four years. We continue to manage and target our business towards 10 million customers in 2010.
Loyalty and customer satisfaction is also benefiting from strong take-up of additional products such as Sky+, Sky Broadband and Sky Talk, with over half of customers now taking an additional product.
Sky+ continued to show strong growth, increasing by 262,000 in the quarter, to 3.4 million customers or 38% penetration of our customer base. Multiroom households grew by 40,000 in the quarter, now 18% of the base. Sky HD grew by 43,000 to 465,000, 5% of the base. During the quarter, we added a further three channels to our high definition (“HD”) service: Sky Movies Premiere HD, Sky Sports HD3 and Rush HD. FX HD launched in April, bringing the total number of HD channels available on Sky to 18, providing customers with a far greater choice of HD viewing than any other TV platform.
Sky Broadband added a further 229,000 customers to take the total to 1.4 million maintaining its position as the fastest growing broadband provider in the UK. As at 31 March 2008, 88% of Sky Broadband customers were on our network and around two-thirds of these on-net customers are taking a paid-for product. For the second year running, the uSwitch “Broadband satisfaction awards” recognised the quality and value offered by Sky Broadband, honouring Sky with the “Best Deal for You” and “Joint Best value for Money” awards.
Sky Talk surpassed one million customers during the quarter with net additions of 180,000 to reach 1.1 million. At 31 March 2008, 57% of Sky Broadband customers also took Sky Talk. Sky Talk also received recognition of its service in the recent uSwitch “Home Phone Customer Satisfaction Awards 2008”. Consumers ranked Sky Talk, the newest entrant in the home phone sector, as the best telephony provider and winner of seven out of eleven categories including “Best overall customer satisfaction” and “Most likely to be recommended”.
As the rapid progress of Sky Broadband and Sky Talk continues, there remains a substantial opportunity for further growth, with less than one in ten Sky customers taking the combination of TV, broadband and telephony at the end of the third quarter.
Our content offering performed strongly throughout the quarter and was supported by investment in content-focused above-the-line marketing to communicate the breadth and quality of our programming. The Easter weekend was particularly strong; Sky Sports achieved its highest ever viewing for the Barclays Premier League in its Grand Slam football weekend on 23 March 2008 and Sky One achieved outstanding audience figures with both original programming and US acquisitions. “Ross Kemp in Afghanistan” and US drama “Lost” both consistently achieved audiences of over one million, while the adaptation of Terry Pratchett’s “The Colour of Magic” reached over two million viewers with its first episode, making Sky One the third most watched channel in Sky homes over Easter.
During the quarter, Sky Sports secured a new three-year agreement for live coverage of the UEFA Champions League from the 2009/10 season. Under the new contract, Sky Sports will show more live matches than ever before, with an increase in both the number of games and match nights. In addition to the live rights, we have also secured cross-platform rights for mobile and broadband and highlights packages.
During the quarter, Sky made significant contribution in the areas of enriching programming, education, the environment and accessibility of the arts. In April, Sky News was awarded a BAFTA for the quality of its news coverage of the Glasgow airport attack and continues to set the pace of innovation in 24 hour breaking news. Sky News remains the only British television news service that does not receive any public subsidy.
At the first anniversary of the launch of auto standby, the UK-pioneered software has been downloaded to more than four million Sky+ and HD set-top boxes. To date, it has saved our customers more than £16 million on their electricity bills and 52,000 tonnes of CO2, more than Sky’s entire direct operational footprint of 45,555 tonnes CO2.
Sky Learning launched ‘Sky Learning Explorer’ in the quarter, which directs customers to programming linked to eight GCSEs, seven A-levels and eight adult interests and passions. Sky has also signed an innovative agreement with Open University to offer customers free introductory courses.
At a time of concern over funding for arts organisations and the price of attending performances, Sky has provided unique opportunities to attend a number of cultural events. Through our partnership with the English National Opera, thousands of Sky customers were able to attend a performance for just £5, and hundreds of local school children were offered educational workshops.
'000s 31-Mar-08 31-Dec-07 Net additions -------------------------------------------------------------------------------- Total customers(1)(2)(3) 8,888 8,832 56 Additional products: Sky+(4) 3,393 3,131 262 Multiroom(5) 1,571 1,531 40 HD 465 422 43 Broadband 1,428 1,199 229 Telephony 1,095 915 180 Other KPI's: Churn 10.5% 10.0% ARPU £424 £421 --------------------------------------------------------------------------------
(1) Includes DTH subscribers in Republic of Ireland. (548,000 as at 31 March 2008, 535,000 as at 31 December 2007.)
(2) DTH subscribers include only primary subscriptions to Sky (no additional Sky+ or Multiroom subscriptions are counted). This does not include customers taking Sky’s freesat offering or churned customers viewing free-to-air channels.
(3) DTH subscribers include subscribers taking Sky packages via DSL through Tiscali TV.
(4) Sky+ includes HD households
(5) Multiroom includes households subscribing to more than one digibox. (No additional units are counted for the second or any subsequent Multiroom subscriptions within one household.)
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