Customers turned off by BSkyB price hike
BSkyB today posted higher first-quarter profits – but admitted that a summer hike in prices in the UK had made it more difficult to hold on to customers than before.
The satellite broadcaster put up prices by between £1.50 (€2.22) and £3 (€4.44) per month for most of its customers at a time when many were feeling the pinch from the economic slowdown in the UK.
This action led to churn – the percentage of subscribers that leave the firm each year – rising further away from its goal of 10% between July and September.
However, the increase in churn from 10.5% to 11.7% did not prevent BSkyB from growing its overall subscriber base as its success in attracting households that had not previously taken its services continued.
Updating investors on its performance in the first quarter of its financial year, BSkyB said operating profits lifted 14% to £215m (€318m).
This improvement reflected higher turnover from customers and a greater slice of the money spent by companies on promoting their products, with advertising revenues up 13% at £81m (€120m).
BSkyB said it was on track to hit its target of having eight million direct-to-home (DTH) digital subscribers by the end of this year after adding 57,000 new customers over summer.
Confidence was underpinned by the fact that more people take satellite television in the run-up to Christmas, while BSkyB also hailed a milestone at its Sky Plus service.
For the first time more than a million households are taking Sky Plus, which allows viewers to pause live TV and record one satellite programme while watching another.
BSkyB said 139,000 households signed up for Sky Plus in the quarter to take the subscription base to 1.03 million by the end of September – more than double the level at the same stage of last year.
Total revenues rose 8% to £1.02bn (€1.5bn) – faster than the 3% growth in expenditure on programming as Sky News dispatched reporters to cover the London terrorist attacks and Hurricanes Katrina and Wilma in the United States.
Chief executive James Murdoch said: “Sky increased sales to new customers and achieved strong profit growth this quarter despite facing a challenging competitive environment and continued economic pressures on consumers.”
Despite the increase in churn, Mr Murdoch said BSkyB had “met or over-achieved” key performance measures including sales and operating profits.
