BSkyB has eased City concerns over subscribers by reporting net growth of 95,000 in the first three months of the year after raising its advertising spending by nearly one-half.

The figure compared with a 66,000 rise in subscribers in the first quarter of 2004 and beat analysts’ forecasts of a 73,000 improvement.

The rise took BSkyB’s subscriber base to 7.7 million, and on track to hit a target of 8 million by the end of this year.

The increase was supported by £379 million in marketing costs, including 47 per cent growth in advertising spending, as BSkyB, in which The News Corporation, parent company of The Times, has a 35.4 per cent stake, supported its "What do you want to watch?" campaign.

Excluding departing customers, the number of subscribers rose by 308,000 in the latest quarter, one-third more than a year before, and a figure that BSkyB said "demonstrates the group’s ability to stimulate continued demand for pay television in a competitive and dynamic environment".

However, the number of subscribers quitting also rose, taking the churn rate, a measure of customer turnover, to 11.1 per cent, one point above the recent average.

James Murdoch, the BSkyB chief executive, said that the rate of customer growth reflected the broadcaster’s "continued focus" on a strategy based on higher marketing spending and attracting customers to its premium Sky Plus package. The number of Sky Plus subscribers rose by 128,000 to 770,000 in the quarter, compared with growth of 72,000 a year before.

Nonetheless, subscriber revenues, on a per user basis, remained flat at an annualised rate of £382.

Advertising takings rose by 9 per cent to £242 million, with takings from SkyBet surging by 40 per cent to £186 million, helped by the introduction of a roulette game.

Group turnover rose by 9.0 per cent to £1.0 billion for the quarter, with underlying pre-tax profits soaring by 54.8 per cent to £209 million.

The data received a mixed response from analysts.

Numis said: "BSkyB has delivered net [subscriber] additions well ahead of consensus and a strong financial performance but there will be concern over ARPU, churn and marketing costs."

BSkyB shares stood 7p lower at 526p in afternoon trade after rising to 540.5p earlier.

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