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Last Updated: Wednesday, 4 May, 2005, 14:22 GMT 15:22 UK
More subscribers flock to BSkyB
Sky dish and digital set-top box
BSkyB's digital subscriber base has now reached 7.7 million
Satellite TV firm BSkyB has reported a rise in subscriber numbers ahead of analyst expectations and strong profits growth for the third quarter.

During the three months to the end of March, the number of subscribers grew by 95,000, BSkyB reported.

Pre-tax pre-exceptional profits rose by more than 50% to �209m ($396.1m), up from �135m a year earlier.

Chief executive James Murdoch launched an aggressive marketing campaign to draw in more subscribers in October.

The firm's marketing costs has since risen more than four-fold to �379m, or 13% of revenue.

"We remain focussed and energetic in pursuing our long-term growth plans," said chief executive James Murdoch.

Churn concern

Though BSkyB said it was on track to reach eight million subscribers by the end of December this year, the average amount of revenue the broadcaster received for each subscriber (the ARPU) fell by �4 to �382 in the third quarter.

There will be concerns about the increase in churn, and the marketing numbers were higher than expected
Paul Richards, analyst

And the churn rate - the percentage of people who left Sky - rose to 11.1% from 9.5% in the second quarter.

However, the company expects churn to steady at about 10% over time.

Some analysts have been concerned that the company is paying too high a price to win new subscribers.

"There were very good net addition numbers but there will be concerns about the increase in churn, and the marketing numbers were higher than expected," said Paul Richards, an analyst for Numis.

Other commentators were more sanguine about the increase in churn.

"If it was sustained over a couple of quarters it could be a problem, but I don't think it should be that discouraging, especially since there's a strong reiteration of the 10% goal," said Simon Baker of SG Securities.

Overall revenues climbed 9% to �1.02bn.

On Wednesday afternoon, shares in BSkyB traded 2.5 pence, or 0.47%, lower at 530.5p.




SEE ALSO:
Subscriber growth boost for BSkyB
02 Feb 05 |  Business
BSkyB subscribers beat forecasts
12 Nov 04 |  Business
BSkyB launches rival to Freeview
21 Jun 04 |  Business
BSkyB promotion hides time limit
10 Jun 04 |  Business


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