BSkyB adds 287,000 HD customers in latest quarter

British Sky Broadcasting Group (BSkyB) 1st Quarter Results for the three months ended 30 September 2009

In the three months to 30 September 2009 (“the quarter”), BSkyB (LSE:BSY) continued to see strong demand for its products.

Net additions for the quarter were 94,000, up 8% year on year, taking the base to 9.536 million customers. Gross additions of 362,000 were 8% higher year on year with strong demand for HD and a continued response to great value broadband and talk. Churn was also higher at 11.3% reflecting a number of important operational decisions implemented in the quarter, against a challenging economic backdrop. We increased pricing on the DTH subscription; we restricted payment options available to customers in arrears wanting to rejoin Sky; and we swapped-out seven million viewing cards across the base as part of a routine replacement to maintain high standards of platform security.

We continued to make good progress on our objective of increasing product penetration. We sold over a million subscription products in the quarter, an increase of more than 70% year on year. Within this was a particularly strong performance in Sky+HD, telephony and line rental.

In addition, the removal of our standalone ‘free’ broadband product in March 2009 also benefited the year on year performance. As a result ARPU increased by GBP39 year on year to reach GBP469.

Strong Demand for Sky+HD

We continue to see strong demand for our high quality and great value Sky+HD service, with the customer base more than doubling over the last 12 months. During the quarter we added a further 287,000 Sky+HD customers — a threefold increase on the prior year — to reach 1.6 million households.

Underpinning this performance is our innovative Sky+ technology, the enhanced picture and sound quality of HD, and our outstanding range of content from great brands. Sky+HD customers can choose from 34 channels from high quality brands spanning sports, movies, arts, drama, kids and documentaries. And now with the addition of ESPN HD, all Premier League games are available to customers in high definition.

Sky+HD was the principal driver behind growth in Sky+, which reached 5.902 million households this quarter and surpassed 60% penetration of the base.

Customer Metrics (unaudited):

                                     Quarterly Net        Closing
                                       Additions           Base
'000s                            30-Sep-09   30-Sep-08   30-Sep-09

Net Customer Additions                  94          87       9,536

Additional products
  Sky+                                 411         421       5,902
  Multiroom                             62          51       1,897
  Sky+HD                               287          93       1,600
  Broadband                            100         164       2,303
  Telephony                            132         120       1,982
  Line-rental                          209          78       1,126
Other KPIs
  Gross additions for the
   quarter (000)                       362         334
  Churn for the quarter
   (annualised %)                    11.3%       10.9%
  ARPU (GBP)                        GBP469      GBP430

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