BSkyB shrugs off threat from BT’s launch of sports channels

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British Sky Broadcasting shrugged off the mounting threat posed by BT in televised sport on Friday, as robust annual results enabled it to increase its dividend by almost a fifth and to promise further share buybacks.

Jeremy Darroch, chief executive, played down the launch next month of BT’s sports channels, which will feature live English Premier League football matches – a niche BSkyB has profitably dominated by means of its Sky Sports arm.

Sky Sports was thriving and had customers who remained very loyal, Mr Darroch said: “We feel very good about where Sky Sports is and what we have got planned.”

He also said the company was well placed to continue to pick up new customers for its broadband internet service, even though sport will aid BT in this area. “There’s loads and loads of headroom for us to grow into,” he said.

In the three months to the end of June, BSkyB announced that it added 119,000 broadband customers, taking its total to more than 4.9m.

BT said this week that it had signed up more than 500,000 households for BT Sport as part of a drive by the telecoms operator to regain market share in the high speed internet market.

Only days before BT Sport’s launch on August 1, BSkyB on Friday launched a £9.99 gadget that can be plugged into a TV to allow non-subscribers to watch its sports coverage over the internet on a pay-as-you-go basis.

Although some content will be free after the initial purchase, users would need to pay an additional £9.99 to access Sky Sports channels. On-demand films would also cost extra.

The launch was seen as an attempt by the satellite broadcaster to grab market share from the estimated 11m Freeview households in the UK which do not subscribe to any form of pay TV.

Mr Darroch said BSkyB would “take a small hit” on the sale of its new mini set-top box but that upfront device costs would be recouped after “two or three uses”.

The group’s sales for the year to June 30 were £7.24bn, up 7 per cent on the previous year. Pre-tax profit was up 6 per cent at £1.26bn, while earnings per share climbed 14 per cent to 59.7p on a diluted basis.

A final dividend of 19p per share has been proposed, making a total of 30p for the year, an increase of 18 per cent. The group said it would also return £500m to investors by a fresh buyback of shares.

Separately, ITV announced the purchase of film and TV producer Big Talk for an initial payment of about £12.5m. The commercial broadcaster will make undisclosed further payments during the next five years depending on profit growth. Big Talk has produced TV series such as ITV’s The Job Lot as well as films including Shaun of the Dead and Hot Fuzz.

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