BSkyB earnings growth slows in post-Christmas lull

Earnings growth slowed slightly for British Sky Broadcasting in its traditionally quiet post-Christmas period, although customer numbers and average revenue per user continued to grow.

Confounding concerns about the maturity of its markets, Sky continued to expand its customer base, with subscription product growth of 715,000 in the third quarter and paid-for subscriptions exceeding 30m for the first time.

Earnings for the nine months to the end of March grew 16% to 43.7p, a slight slowdown from the 17% growth seen in the first six months, although revenues increased 6% to £5.38bn and operating profits were up 9.0% to £994m.

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New operating efficiencies levered operating margin up 60 basis points to 18.5%, despite programming costs jumping 9.0% to £1.86bn, with sports accounting for almost half of the increase as the company ramps up its offering in preparation for the launch of rival programming from BT.

Chief Executive Jeremy Darroch said the group's multi-product strategy was delivering strong results.

"Despite the tough consumer environment, we added 715,000 more subscription products in three months, taking the total past 30m for the first time. On the back of this growth, we are creating 550 new jobs to meet demand for our products and serve our growing customer base."

The launch on March 28th of new channel, Sky Movies Disney, the first time that Disney has ever been involved in a co-branded movie channel, was a big hit with customers, with Disney titles accounting for 40% of all downloads through 'On Demand' and attracting 685,000 views across Sky Go in its first weekend.

In the television business, Darroch pointed to continued growth in its internet-connected TV services as customers take advantage of new ways to watch our content.

"The number of internet-connected Sky+HD boxes grew by almost 45,000 every week in the quarter, leading to a fivefold increase in On Demand downloads and 37% growth in movie rentals against last year."

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