BSkyB decoder give-away drags results into the red ATTENTION - ADDS reaction, share price
08/11/1999
Agence France-Presse
(Copyright 1999)
LONDON, Aug 11 (AFP) - Satellite broadcaster BSkyB reported a hefty pre-tax loss on Wednesday as the cost of its digital television launch and decoder give-away ate deep into revenues.
The company trumpeted a sharp jump in the number of digital clients to well over one million at the end of July, but the aggressive sales drive left the broadcaster part owned by Rupert Murdoch nursing an annual pre-tax loss of 388 million pounds (625 million dollars, 582 million euros).
BSkyB suspended its dividend payment, as earlier promised when it decided in May to offer it set-top digital decoder free to clients. About 660,000 boxes have since been "sold," BSkyB said, taking the number of subscribers to 1.21 million.
The dramatic initiative resulted in exceptional charges of 461 million pounds weighing down on BSkyB's bottom line. Without the charges, pre-tax, pre-exceptional profits amounted to 73 million pounds, sharply down from 271 million pounds last year.
But investors were watching the new subscriber numbers more closely than bald financial statistics, and bid the price of BSkyB stock up 18 pence to 579 pence by lunchtime.
BSkyB launched its free set-top decoder attack on May 5 in a move viewed as a risk worth taking in the scramble for a share of the fast-growing digital market.
Its digital sales topped the one-million mark much earlier than an October target date set previously, and crucially more than half a million were to new customers rather than to existing subscribers of BSkyB's analogue services migrating to the new digital operation.
"These are an excellent set of subscriber numbers," said Dresdner Kleinwort Benson analyst Neil Carter. "The total number is higher as is the proportion of subscribers new to Sky."
BSkyB remains the most popular British pay-tv network, Murdoch having built up a loyal following through the purchase of exclusive rights to major sporting fixtures, including all live Premiership soccer.
But OnDigital, a terrestrial television joint venture of the Carlton and Granada media groups, has already matched BSkyB's free decoder offer. Cable outfits are also poised to roll out their own digital services, increasing competition.
All digital operators meanwhile face the prospect of a new government levy on consumers to help fund the BBC's own digital plans.
Last week a government-appointed panel recommended a new 'digital licence' of 24 pounds a year to provide the funds that would ensure the BBC does not fall behind BSkyB and its rivals in the race to digital.
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