Sky Unveils Internet TV Service, Half-Year Results

LONDON: BSkyB, which posted strong half-year profits, is planning to launch a new Internet TV service, positioned as an alternative for people who don’t currently subscribe to pay TV.

Expected to launch in the first half of the year, the new service will feature a range of Sky content, including hundreds of films from Sky Movies. The as-yet-unnamed service will be available to anyone in the U.K. with a broadband connection. Sky is touting its flexible pricing plan, which allows customers to choose whether they want to pay month for unlimited access or rent single programs on a pay-as-you-go basis.

Jeremy Darroch, Sky’s chief executive, said: “This exciting new service will offer some of Sky’s most popular content through a wide range of broadband connected devices. Alongside the continued growth of our satellite platform, this will be a new way for us to reach out to consumers who love great content, but may not want the full Sky service. Bringing a distinctive, new choice to the marketplace will help us meet the needs and demands of an ever wider range of consumers. This new product launch will build on our early leadership in multiplatform distribution. It will allow us to make our expertise and investment in content and technology work even harder, extending our options for continued growth.”

The news comes on the back of Sky announcing positive results for the six months ended December 31, 2011. Revenue gained 6 percent to £3.4 billion ($5.36 billion), while operating profit reached £601 million ($947.5 million), up 16 percent year-on-year. Sky’s customer base at the end of December stood at 10.471 million, while its triple-play base grew to 3 million, a gain of 26 percent. The company reported 2.5 million users for its Sky Go service, given as a bonus to subscribers. HD subscribers reached 4.06 million, up 138,000 on the previous quarter. Multiroom customers were 2.35 million, up 55,000. Broadband customers numbered 3.65 million, up 166,000. ARPU stood at £544 ($857.50), up £8 ($12.60) year-on-year, while churn was relatively flat, up just 1 percent to reach 9.6 percent.

Darroch commented: “It has been a strong first half with progress on all fronts. While these are tough times for many consumers, our customers are staying loyal and morehouseholds continue to join us. From broadband to high definition, people are choosing Sky for a wider range of products than ever, underlining the transformation of our business over the last few years.

“Our approach to growth is working well. We’re adding more value to the Sky subscription by investing where it matters most to customers, with more great entertainment and ground-breaking innovation like Sky Go. Alongside that, we’re improving efficiency behind the scenes so we can expand margins at the same time. Financially, we’ve delivered another strong result, with our highest ever first-half operating profit and 20-percent growth in earnings per share. On the back of this, we’re increasing the dividend again and have started our share buyback program to increase returns for our shareholders.

“We expect the environment to remain tough in calendar 2012. No consumer business can be immune to these conditions and we will manage any short-term headwinds as they emerge. Staying focused on the long-term opportunity, we’ve got a strong set of plans to keep delivering for customers and shareholders. This will be an outstanding year on screen, including more original British productions and a new channel dedicated to Formula 1, and we have exciting products in the pipeline that will create more ways to access our content and more reasons to join and stay with us.”

Sky also unveiled a number of enhancements to its broadband services, including increased coverage, 10,000 wi-fi hotspots and a new fibre option. Stephen van Rooyen, the managing director of Sky’s sales and marketing group, commented: “I’m delighted that our existing home communication products are making such an impact with customers. It’s clear that customers are responding to the higher levels of value, quality and service we offer.

“This year sees a number of enhancements that will ensure we create even more choice. Whether it’s the launch of free public WiFi, extending our network into more parts of the U.K., or adding fibre to our product mix, we are focused on meeting the demands of customers and on being their number one choice for home communications.”