BSkyB Results Show 27-per-Cent Revenues Boost
Highlights
Digital sales of 5.4 million to date
Record Q3 net DTH subscriber growth of 252,000
Revenue increases by 27% to £1.7 billion
95% of DTH subscribers now digital
EBITDA before exceptionals increases by 64% to £140 million
Churn stable at less than 10%
BSkyB increases its stake in British Interactive
Broadcasting Holdings to 80.1%
Tony Ball, Chief Executive of British Sky Broadcasting Group plc, said:
'The past three months have seen another strong performance from Sky digital, with subscribers, revenues and operating profit all demonstrating significant year-on-year growth. Financially, as well as operationally, we continue to make real progress.'
BUSINESS REVIEW
Operational
At 31 March 2001 the total number of direct-to-home ('DTH') subscribers was 5,303,000 of which 95% were digital subscribers. A third quarter record net DTH subscriber growth of 252,000 was achieved in the three months to 31 March 2001 ('the quarter'). Just 242,000 analogue subscribers remain at 31 March 2001. Total subscribers to Sky's channels increased by 141,000 in the quarter to 9,891,000.
The number of digital sales to 8 May 2001 was 5.4 million.
The success of BSkyB's ('the Group's') programme of transitioning analogue customers means that the termination of the current analogue service will occur, as previously announced, during the summer of 2001.
Churn for the year to date (annualised) stands at 9.9%.
Sky channels' share of viewing in all UK homes was 5.7%, up 12% on the nine months ended 31 March 2000 ('the comparable period'), in comparison to the 4% year-on-year fall in viewing of the core terrestrial channels.
Within digital satellite homes eight of the ten most popular non-terrestrial entertainment programmes were broadcast on Sky One.
Sky Movies' acquisition of the rights to the Star Wars films proved a popular success. On consecutive weeks, all four features attracted more than 1 million viewers each; the UK television premiere of Star Wars: Episode One - The Phantom Menace drew an audience of more than 1.5 million individuals.
Sky Sports continues to go from strength to strength. Recent rights acquisitions have included a new 5-year deal with the US PGA Tour, which gives Sky Sports rights to live tour events until 2006, a new deal with Sports Network for live British and world boxing, and agreements for live coverage of England's next two overseas cricket tours.
Financial
Growth in the operating profitability of the Group continued to accelerate in the quarter. Operating profit before goodwill for the nine months ended 31 March 2001 ('the period') increased to £97 million, up 90% compared with £51 million for the comparable period.
DTH revenues increased by £270 million to £1,114 million as a result of an increase of 31% in the average number of DTH subscribers, and growth in the average revenue per subscriber, excluding interactive revenue, from £282 in the comparable period to £289 for the nine months to 31 March 2001 (annualised).
Higher wholesale prices and an increase in the average number of digital terrestrial ('DTT') subscribers were offset by a 5% decrease in average cable subscribers and the continued decline in the average number of premium channels taken by both cable and DTT subscribers. Consequently cable and DTT revenue declined slightly in the period to £220 million.
The Group's advertising revenue remained, and continues to be, relatively buoyant, increasing by 16% on the comparable period to £200 million. This increase reflects the greater penetration of Sky's channels, which rose to 38% of UK TV homes, up from 33% in the comparable period.
Interactive revenues for the period were £60 million, of which £55 million related to betting via the telephone, the PC and interactive television.
Programming costs for the period increased by £157 million to £829 million, principally as a result of higher movie costs due to the higher number of subscribers, but also due to an increase in the amount of original programming commissioned.
Other operating costs for the period increased by £151 million to £745 million with the first-time inclusion of £80 million of costs related to interactive services (betting costs being the single largest element) and the increased cost of subscriber management reflecting the higher number of subscribers. Transmission costs remained approximately level for the third successive quarter as the cost savings of the approaching analogue closure are realised.
EBITDA for the period before exceptional items increased by 64% from £85 million to £140 million.
The Group's share of the operating losses of joint ventures increased significantly to £175 million compared to £83 million in the comparable period. The increase was almost wholly due to the inclusion of the Group's share of the operating losses of KirchPayTV (£86 million) which were not accounted for in the comparable period.
British Interactive Broadcasting Holdings Ltd's ('BiB's') revenues for the period were £56 million and operating expenditure was £214 million, of which £ 110 million related to set top box subsidies. BiB's operating loss for the period was £158 million. The Group's share of the operating loss of BiB increased by £11 million to £86 million in the period as the Group accounted for BiB as a 32.5% joint venture until 1 November 2000 from which date 100% of BiB's losses have been recognised. BiB figures are stated before the elimination of intercompany transactions with BSkyB. These transactions will be eliminated following completion, when BiB will be consolidated within the results of the Group.
As part of a review of investments, the Group has made a general provision against its minority equity interests in new media companies. In the quarter this has led to a non-cash exceptional charge of £16 million that is accounted for below operating profit. This takes the balance sheet carrying value of the Group's minority investments in new media companies to nil.
After its share of the results of joint ventures, the Group made a loss before taxation of £365 million. The loss after tax in the period was £367 million.
During the period there was a net cash outflow of £416 million including £118 million in relation to transitioning analogue subscribers to digital, joint venture funding and capital expenditure of £205 million and net interest payments of £98 million. Net debt at the end of the period was £1,561 million.
Corporate
On 8 May 2001 the Minister for Consumers and Corporate Affairs announced that he had accepted undertakings from the Group in lieu of a reference to the Competition Commission in respect of the Group's acquisition of the HSBC, Matsushita and BT shareholdings in BiB.
Regulatory clearance having now been obtained, BSkyB has completed the acquisition of the HSBC and Matsushita shareholdings in BiB. This takes BSkyB's stake in BiB to 80.1%. Following a strategic and efficiency review by BSkyB management, BSkyB will, in the quarter ending 30 June 2001, take an exceptional restructuring charge of £40 million and reduce Sky Interactive's ongoing cost base. A separate press release covering the completion of the BiB transaction has been issued this morning.
On 2 April 2001 the Office of Fair Trading notified the Group that after consideration it had concluded that BSkyB need not observe two undertakings it gave in 1996. The first undertaking was the need for Sky One to be on a rate card for wholesale purposes and the second was the need for BSkyB to provide and maintain separated wholesale and retail accounts.
On 30 April 2001 Morton Topfer resigned as a non-executive Director of the Group.
For further information please contact:
Analysts/Investors:
Martin Stewart
Tel: 020 7705 3000
E-mail: investor-relations@bskyb.com
Press:
Julian Eccles
Tel: 020 7705 3267
EBITDA before exceptionals increases by 64% to £140 million
Tony Ball, Chief Executive of British Sky Broadcasting Group plc, said:
'The past three months have seen another strong performance from Sky digital, with subscribers, revenues and operating profit all demonstrating significant year-on-year growth. Financially, as well as operationally, we continue to make real progress.'
BUSINESS REVIEW
Operational
At 31 March 2001 the total number of direct-to-home ('DTH') subscribers was 5,303,000 of which 95% were digital subscribers. A third quarter record net DTH subscriber growth of 252,000 was achieved in the three months to 31 March 2001 ('the quarter'). Just 242,000 analogue subscribers remain at 31 March 2001. Total subscribers to Sky's channels increased by 141,000 in the quarter to 9,891,000.
The number of digital sales to 8 May 2001 was 5.4 million.
The success of BSkyB's ('the Group's') programme of transitioning analogue customers means that the termination of the current analogue service will occur, as previously announced, during the summer of 2001.
Churn for the year to date (annualised) stands at 9.9%.
Sky channels' share of viewing in all UK homes was 5.7%, up 12% on the nine months ended 31 March 2000 ('the comparable period'), in comparison to the 4% year-on-year fall in viewing of the core terrestrial channels.
Within digital satellite homes eight of the ten most popular non-terrestrial entertainment programmes were broadcast on Sky One.
Sky Movies' acquisition of the rights to the Star Wars films proved a popular success. On consecutive weeks, all four features attracted more than 1 million viewers each; the UK television premiere of Star Wars: Episode One - The Phantom Menace drew an audience of more than 1.5 million individuals.
Sky Sports continues to go from strength to strength. Recent rights acquisitions have included a new 5-year deal with the US PGA Tour, which gives Sky Sports rights to live tour events until 2006, a new deal with Sports Network for live British and world boxing, and agreements for live coverage of England's next two overseas cricket tours.
Financial
Growth in the operating profitability of the Group continued to accelerate in the quarter. Operating profit before goodwill for the nine months ended 31 March 2001 ('the period') increased to £97 million, up 90% compared with £51 million for the comparable period.
DTH revenues increased by £270 million to £1,114 million as a result of an increase of 31% in the average number of DTH subscribers, and growth in the average revenue per subscriber, excluding interactive revenue, from £282 in the comparable period to £289 for the nine months to 31 March 2001 (annualised).
Higher wholesale prices and an increase in the average number of digital terrestrial ('DTT') subscribers were offset by a 5% decrease in average cable subscribers and the continued decline in the average number of premium channels taken by both cable and DTT subscribers. Consequently cable and DTT revenue declined slightly in the period to £220 million.
The Group's advertising revenue remained, and continues to be, relatively buoyant, increasing by 16% on the comparable period to £200 million. This increase reflects the greater penetration of Sky's channels, which rose to 38% of UK TV homes, up from 33% in the comparable period.
Interactive revenues for the period were £60 million, of which £55 million related to betting via the telephone, the PC and interactive television.
Programming costs for the period increased by £157 million to £829 million, principally as a result of higher movie costs due to the higher number of subscribers, but also due to an increase in the amount of original programming commissioned.
Other operating costs for the period increased by £151 million to £745 million with the first-time inclusion of £80 million of costs related to interactive services (betting costs being the single largest element) and the increased cost of subscriber management reflecting the higher number of subscribers. Transmission costs remained approximately level for the third successive quarter as the cost savings of the approaching analogue closure are realised.
EBITDA for the period before exceptional items increased by 64% from £85 million to £140 million.
The Group's share of the operating losses of joint ventures increased significantly to £175 million compared to £83 million in the comparable period. The increase was almost wholly due to the inclusion of the Group's share of the operating losses of KirchPayTV (£86 million) which were not accounted for in the comparable period.
British Interactive Broadcasting Holdings Ltd's ('BiB's') revenues for the period were £56 million and operating expenditure was £214 million, of which £ 110 million related to set top box subsidies. BiB's operating loss for the period was £158 million. The Group's share of the operating loss of BiB increased by £11 million to £86 million in the period as the Group accounted for BiB as a 32.5% joint venture until 1 November 2000 from which date 100% of BiB's losses have been recognised. BiB figures are stated before the elimination of intercompany transactions with BSkyB. These transactions will be eliminated following completion, when BiB will be consolidated within the results of the Group.
As part of a review of investments, the Group has made a general provision against its minority equity interests in new media companies. In the quarter this has led to a non-cash exceptional charge of £16 million that is accounted for below operating profit. This takes the balance sheet carrying value of the Group's minority investments in new media companies to nil.
After its share of the results of joint ventures, the Group made a loss before taxation of £365 million. The loss after tax in the period was £367 million.
During the period there was a net cash outflow of £416 million including £118 million in relation to transitioning analogue subscribers to digital, joint venture funding and capital expenditure of £205 million and net interest payments of £98 million. Net debt at the end of the period was £1,561 million.
Corporate
On 8 May 2001 the Minister for Consumers and Corporate Affairs announced that he had accepted undertakings from the Group in lieu of a reference to the Competition Commission in respect of the Group's acquisition of the HSBC, Matsushita and BT shareholdings in BiB.
Regulatory clearance having now been obtained, BSkyB has completed the acquisition of the HSBC and Matsushita shareholdings in BiB. This takes BSkyB's stake in BiB to 80.1%. Following a strategic and efficiency review by BSkyB management, BSkyB will, in the quarter ending 30 June 2001, take an exceptional restructuring charge of £40 million and reduce Sky Interactive's ongoing cost base. A separate press release covering the completion of the BiB transaction has been issued this morning.
On 2 April 2001 the Office of Fair Trading notified the Group that after consideration it had concluded that BSkyB need not observe two undertakings it gave in 1996. The first undertaking was the need for Sky One to be on a rate card for wholesale purposes and the second was the need for BSkyB to provide and maintain separated wholesale and retail accounts.
On 30 April 2001 Morton Topfer resigned as a non-executive Director of the Group.
For further information please contact:
Analysts/Investors:
Martin Stewart
Tel: 020 7705 3000
E-mail: investor-relations@bskyb.com
Press:
Julian Eccles
Tel: 020 7705 3267