Dan Sabbagh, Media Editor
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BSkyB added 90,000 customers in the second quarter of the year, making gains that were better than expected at the expense of Virgin Media after the dispute between Britain’s two pay-television groups.
The satellite operator did not spell out how many new subscribers it had recruited directly from Virgin, but its rival privately is conceding that it has lost about 40,000, most of whom have switched to Sky. Sky is 39.1 per cent owned by News Corporation, parent company of The Times.
James Murdoch, the chief executive of Sky, said that that it was “difficult to isolate” how many subscribers had switched, but added: “We did indicate that we expected to add 100,000 customers in this half of the year, and we have added 141,000.”
In March, Sky’s basic channels, including Sky One, were taken off Virgin Media’s cable platform after a protracted row over price. Mr Murdoch said that he was “at the negotiating table right now”, but said that “this leadership [of Virgin Media] doesn’t seem to be interested”.
If the private predictions from the Virgin Media camp are correct, it would mean that Sky has gained customers worth £16.5 million annually.
However, it is also expected to lose up to £60 million in annual operating profit in reduced carriage fees and advertising because it is no longer on the cable network.
Sky’s reluctance to attempt to publicly estimate how much it had gained from its principal rival came as it argued that it had made progress against all its principal competitors and that it could keep up an accelerated rate of growth.
Sky added 51,000 in the first three months of the year, rising to 90,000 between April and June, but executives said that customers had a “wide range of reasons for coming to Sky”.
The figures impressed the City, which had been expecting a gain of about 60,000, and the shares rose 28p to 700p, a level that the stock had not hit since mid2004. Sentiment was also boosted by the improvement in average revenues per customer, up £21 to £412 on the year – helped as customers took broadband and telephone products as well.
Sky released the figures a fortnight ahead of the publication of its preliminary results in an effort to highlight the operational performance. It said that operating profits remain in line with expectations, which sit at £755 million to £770 million, although the results presentation is likely to feature questions about the ongoing financial impact of the Virgin row.
A year after Sky began to supply broadband, the company said that it was connecting 716,000 subscribers, up by 259,000 in the period. Of these, 72 per cent are taking one of the paid-for products, which cost either £5 or £10 a month on top of a television subscription.
Executives produced data showing that it had the strongest broadband growth of any of its competitors in the three months to March, after taking a 33 per cent market share during that period. Its number of telecoms customers improved by 171,000 to 526,000, and 318,000 subscribers take all three products: television, telephone and broadband.
Mr Murdoch used the data to argue that Sky was competing successfully despite a welter of regulatory inquiries. “Does that look like a business under siege?” he said in response to questions about pending inquiries relating to the purchase of a 17.9 per cent stake in ITV and attempts to introduce a paid-for service via Freeview. “Of course our investment in ITV was going to draw regulatory scrutiny,” Mr Murdoch said, adding that complaints from rivals about its Freeview plans were predictable. “It’s pretty transparent what’s going on there,” he said.
Channel vision
— Total customers: 8.58 million (up 90,000)
— Sky subscribers: 2.37 million (up 207,000)
— High-definition subscribers: 292,000 (up 48,000)
— Multi-room subscribers: 1.34 million (up 46,000)
— Telephony subscribers: 526,000 (up 171,000)
— Churn rate: 12.1 per cent (down 1.6 per cent)
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