BSkyB nearing Murdoch's targets

HEAVY marketing has seen more and more people signing up for BSkyB's satellite television services, putting the company on track to achieve its target of 8m subscribers by the end of the year.

BSkyB launched its 'What do you want to watch?' advertising campaign in March and waived installation charges on all its popular Sky packages. The company's efforts were rewarded with 95,000 new subscribers, well ahead of City forecasts for what is traditionally a quiet period of the year after a big surge in registrations in the run-up to Christmas.

The growth in the customer base contributed to a 49% jump in third-quarter profits to £381m, with turnover up 10% at £2.96bn. A packed international calendar of sport meant that sports viewing had been a particular success. Sky Sports recorded its highest ever quarterly share of viewing in Sky digital homes and in football this season's Carling Cup Final between Chelsea and Liverpool set a new viewing record for any Cup match on Sky.

Advertising revenues, meanwhile, surged 9% to £242m, beating the 8% average figure achieved by the UK television sector as a whole over the same nine-month period.

Today's figures are a vindication of chief executive James Murdoch's expansive marketing strategy, which has seen a blitz of advertising and promotion ? but has led to Sky bringing in large numbers of new viewers beyond its heartland of sports and film fans.

Analysts have begun focusing on the cost of winning new subscribers. In February BSkyB reported an 11% rise in average subscriber acquisition costs. As expected, there was no update on this figure today but the gross margin climbed 3.2% to 19.4%, which is likely to indicate that the company has kept a lid on costs, despite heavy marketing expenditure.

The City believes BSkyB is well on track to achieve its goal of 8m subscribers by the end of the year. At current growth rates the company should pass that target from today's 7.7m figure. Murdoch wants to reach 10m by 2010 and has said he is willing to sacrifice short-term profits to achieve that figure.