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To: Craig A who wrote (4798)	2/10/1999 8:20:00 AM
From: Thai Chung	Read Replies (1) \| Respond to of 41369

BSkyB rings up big digital sales Breaks into Internet with AOL alliance By Suzanne Miller, CBS MarketWatch Last Update: 5:00 AM ET Feb 10, 1999 CNET's estate LONDON (CBS.MW) -- British Sky Broadcasting Group Plc said Wednesday that its new digital service has turned out to be a stellar success despite the hefty launch cost, which took a big bite out of six-month profits. BSkyB (BSY), 20-percent owned by media mogul Rubert Murdoch, also disclosed that it's breaking into the Internet business -- one day after internet stocks took a big hammering on Wall Street and weeks after Murdoch said internet stocks are overvalued. It has struck a marketing agreement with American Online (AOL). The British company will supply its Sky Sports website to AOL, and AOL will help to market SkyDigital to its subscribers. "We believe Sky's strong brands will create many opportunities on the internet of which this is the first step," said Mark Booth, BSkyB's chief executive. The AOL deal will likely jack up BSkyB's digital sales even further. In just four months, SkyDigital has rung up more than 350,000 sales, with over 120,0000, or 34 percent of them being new subscribers. Analysts had generally expected BSkyB to attract a maxium of 29 percent in new digital customers. The number of new customers is significant because it's an important aspect of the company's future strategy and has represented a big chunk of its spending. Programming costs rose by 39.5 million pounds ($65 million) to $605 million while marketing costs rose $42 million to $181 million. Meanwhile, the company's six-month pretax profits through Dec. 31, fell sharply, plummeting $124 million to $88 million. Revenues for the period rose 9 percent to 753 million $1.24 billion. The fall in profits reflected heavy spending on the company's big push to launch its digital service and attract new subscribers -- a cost investors have deemed well worthwhile. The company's shares have soared as much as 10 percent since the company released its results. Looking ahead, BSkyB said it will continue to build the digital platform through both new and transition customers. As such, it will continue investing in programming, marketing and subscriber management. In a statement, the company said: "We have been very encouraged by the results from digital to date and have set a target of one million digital subscribers by October 1999."