Now that BSkyB’s end-of-year results are out (issued Sept 26), the financial and media community awaits the verdict of the UK’s Competition Appeal Tribunal on whether Sky must divest itself of some 10% in ITV, the UK’s largest commercial network broadcaster. The Tribunal will issue its findings today, Sept 29, and chairman James Murdoch (on left) and CEO Jeremy Darroch must be tired of waiting.

BSkyB paid £940m for a 17.9% stake in ITV back in November 2006 but if it has to sell, will do so for considerably less. CEO Jeremy Darroch also spoke at Sky’s results about its rumoured move into Spanish pay-TV.

Sky’s $940m stake in ITV is now valued at a meagre £300m, such has been the decline in ITV’s share price over the past two years. Indeed, the overhanging Sky investment and the knowledge that it will probably have to sell the stake has been a major factor in driving ITV’s price down. The low price has also brought interest in ITV from a number of media players, not least Mediaset (and/or Endemol) as well as Bertelsmann (and/or subsidiary RTL).

RTL CEO Gerhard Zeiler, coincidentally, was speaking at a conference in London on Sept 26, and declined to comment on RTL’s intentions regarding Sky’s stake, or a move on ITV in general but did say RTL would be holding onto its stake in Channel 5.

However, the collapsing ITV investment has done few favours for BSkyB chairman James Murdoch with investors, some of whom on Sept 26 forced a vote on his confirmation appointment at the BSkyB AGM. Some 15% of shareholders either voted against or withheld their support for James Murdoch. (Rupert Murdoch stepped down as chairman last December). Sky, during the year, wrote off £616m as a non-cash accounting impairment to cover the ITV stake.

As to the move into Spanish pay-TV, Darroch coyly said that Sky would consider “from time to time acquisitions” but did not elaborate on the reports that it was looking at picking up Digital+ in Spain.

BSkyB’s fourth quarter and year-end results (to June 30) showed net subscriber growth up 92,000 during the three months (“the highest for five years”) to 8.98m, and reduced churn to 9.8%, all of which is good news. Eighteen months ago (Q2/Q3 2007) churn was a worrying 13.7%, and the current churn rate is the best since 2005. Jeremy Darroch stressed that churn would rise again, as it always does when price rises are announced, but that Sky was very much on track for 10m subs by 2010.

Analysing the numbers shows that the broadcaster’s Sky+ PVR unit is now in 3.7m homes (up 321,000), while multiroom penetration is up modestly by 33,000 to 1.6m. Sky’s HDTV subscribers are just shy of 500,000 (six per cent of Sky’s base) up a net 33,000 to 498,000. Perhaps the most encouraging growth number is Sky’s Broadband connections, up 200,000 to 1.62m. Indeed, some 70% of new customers are taking additional Sky products.

Source: Rapid TV News 2008

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