BSkyB profits surge amid News Corp. takeover saga

27th January 2011, Comments 0 comments

BSkyB announced soaring profits Thursday as the British pay-TV giant awaits a possible full takeover by Rupert Murdoch's News Corp., and as it bids to repair its reputation after a sexism scandal.

BSkyB said its half-year net profit surged 59 percent to 407 million pounds (473 million euros, $648 million) as the satellite broadcaster of English Premier League football and the Sky News channel surpassed 10 million customers.

The earnings update for the six months to the end of December came two days after Britain's government allowed News Corp. more time to argue its case for its bid to take full control of BSkyB in the face of competition concerns.

And on Wednesday, Sky Sports football presenter Richard Keys resigned after making disparaging off-air comments about a woman match official in a scandal that led to his colleague Andy Gray being sacked 24 hours earlier.

In a conversation between Keys and Gray ahead of last Saturday's Premier League match between Wolves and Liverpool, both men suggested assistant referee Sian Massey was unlikely to understand the offside rule.

Coverage of the Premier League has been key to BSkyB's growing commercial success over the past 20 years.

Speaking of the group's latest progress, BSkyB chief executive Jeremy Darroch said: "The business has delivered a half year of outstanding performance, with record product sales and strong double-digit growth in revenue, profit and cash flow.

"In recognition of the growing strength of the business, we are increasing the interim dividend by a further 11 percent, the seventh consecutive year of growth," he added in the company's earnings statement.

BSkyB's share price was up 2.0 percent to 772.5 pence in London midday trade, which was comfortably above News Corp.'s offer price of 700 pence a share.

"Despite the inevitable distractions of the News Corp. bid, Sky continues to power ahead regardless," said Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers.

"Its recent growth trajectory has been maintained, with the 10 million customer mark having been surpassed by the end of last year as forecast.

"The News Corp. situation could drag on for a while yet, but in the meantime Sky is firing on all cylinders," he said on Thursday.

News Corp. had in June bid £7.8 billion for the 61 percent of BSkyB it does not own. BSkyB has rejected the offer and says it wants 800 pence a share but is nevertheless continuing talks with Murdoch's media empire.

European regulators have said they wouldn't stand in the way of a takeover, however there is fierce opposition to the deal from a host of British broadcasters and newspapers.

The British government has said that it is likely to refer the deal to Britain's competition watchdog despite offering News Corp. more time to argue its case.

BSkyB also provides telephone and Internet services and on Thursday said that it had bought The Cloud, a public Wi-Fi network operator, for an undisclosed amount.

News Corp. owns 39 percent of BSkyB, making it the group's largest shareholder. News Corp. also includes News International, whose British Sunday tabloid, News of the World, is at the centre of a phone hacking row.

British police on Wednesday launched a fresh investigation into allegations that celebrities had their phones hacked by the newspaper.

The scandal led to the resignation last week of British Prime Minister David Cameron's communications chief Andy Coulson, the newspaper's former editor, while Murdoch has snubbed a key economic summit in Davos, Switzerland, reportedly to deal with the crises at News of the World and Sky Sports.

© 2011 AFP

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