BSkyB cuts loss despite digital hit

BRITISH Sky Broadcasting has reduced its losses despite taking a £22m hit from the collapse of ITV Digital, shut by administrators last month. Sales rose 21% to £2.03bn for the nine months to 31 March as Sky added 171,000 subscribers in the three months to end-March, against forecasts for 150,000, making 5.9m in all.

Although the collapse of ITV Digital is a blow for Sky, and is likely to cost it £70m in programme sales next year, it is also expected to strengthen the group's subscriber base as many of its more than one million customers migrate to Sky.

'We have seen sales go up a bit, but with the end of the football season it's perhaps not the best time,' said chief executive Tony Ball. 'We may see more in July and August with the season starting again, but sales of second set-top boxes have gone up considerably, suggesting a number of homes already had both Sky and ITV Digital.'

He also welcomed the Government's new Communications-Bill, which has lifted many former cross-media ownership restrictions, as a 'step in the right direction' but criticised it for effectively stopping Rupert Murdoch- backed Sky from bidding for ITV. Ball agreed Channel 5 could provide a more realistic alternative.

Sky today said its share of viewing in British homes rose 18% over the past year to 6.7% by the end of March and, although advertising revenue fell 11% and programme sales to other broadcasters were broadly flat, the group's underlying performance was largely ahead of forecasts.

Average annual spending per subscriber rose 11%, to £341, and losses for the three-month period were cut from £105.1m to £26.4m before tax, as turnover rose 15% to £733.5m. But, reflecting higher programming expenditure, the nine-month pre-tax loss soared to £1.28bn from £365bn.

However, earnings before exceptional items rose 35% to £190m and core operating profit rose 33% to 129m. Ball said the results showed that Sky 'continues to make progress on all fronts'.