BSkyB Posts Improved Results, Says It Is 'Fit and Proper' to Hold U.K. Broadcast License
UPDATED: "Our track record as a broadcaster is the most important factor," says Jeremy Darroch, CEO of the U.K. pay TV giant, about a regulatory evaluation amid the News Corp. phone hacking scandal.
LONDON - U.K. pay TV giant BSkyB on Wednesday reported improved financials for the nine months ended March 31 as it continued to grow subscribers, but much attention will focus on the company's comments on a continuing regulatory evaluation of whether it is "fit and proper" to hold a broadcast license.
The company, in which Rupert Murdoch's News Corp. owns about 39 percent, commented on the latest move from U.K. media regulator Ofcom, which last week announced it was stepping up its gathering of evidence as part of its assessment of BSkyB was "fit and proper" amid the News Corp. phone hacking scandal. "The company is engaging with Ofcom in this process and continues to believe that it remains a fit and proper license holder, as demonstrated by its positive contribution to U.K. audiences, employment and the broader economy, as well as its strong record of regulatory compliance and high standards of governance," BSkyB said.
CEO Jeremy Darroch on a conference call with analysts later emphasized that BSkyB and News Corp. are separate companies. "Our track record as a broadcaster is the most important factor" in determining the company's fitness to have a license, he argued, highlighting the company's "broader contributio" to the British media industry.
As examples, he pointed to billions of pounds that the firm spends on programming every year, including more than £1 billion ($1.6 billion) at Sky News. Plus, tax contributions also run at around £1 billion a year, he added. "We are proud of our ongoing contribution, which I think is second to none," Darroch said. We will keep doing our day job well, keep delivering, and our record will speak for itself."
In a statement, BSkyB also reiterated recent comments that it has concluded a review of editorial practices at its Sky News channel "at its instigation as part of its commitment to acting responsibly across all areas of our business." It said that "these reviews found no evidence of impropriety or cause for concern."
Separately, BSkyB's audit committee has reviewed the company’s approach to two investigations undertaken, in which a Sky News journalist accessed emails of individuals suspected of criminal activity. "Following a thorough review of each of those cases, we are satisfied that the action was justified in the public interest and subject to proper editorial oversight," BSkyB reiterated.
BSkyB also disclosed that James Murdoch, the son of Rupert Murdoch and deputy COO of News Corp. who recently stepped down as BSkyB chairman, while remaining on its board, has been appointed chairman of the company's Bigger Picture Committee. The committee focuses on environmental contributions to the community, sports and the arts.
BSkyB ended March with 10.27 million TV subscribers, up 15,000 in the quarter and 121,000 over the year-ago period. At the end of its previous fiscal year, which ends in June, it had reported 10.19 million subs. The company added 78,000 net new user households in the quarter to reach 10.55 million total customers, including 281,000 standalone broadband users. That was up from 10.29 million at the end of the previous fiscal year.
The company posted adjusted operating profit of £908 million ($1.5 billion), up 15 percent from £790 million ($1.3 billion) in the year-ago period. Earnings per share came in at 37.8 pence (61 cents), up 24 percent from 30.5 pence (49 cents) in the same period a year earlier. Revenue rose 5 percent to £5.08 billion ($8.2 billion).
“We have made a good start to 2012," said Darroch. "In what remains a tough economic environment, strong and consistent execution of our plan has delivered good growth across our product range."
In March, BSKyB had announced an over-the-top Internet TV service called NOW TV. The company said Wednesday that it was on track to launch it by mid-year. "The service will initially offer access to our movie content, but will soon expand to include sport and entertainment, with customers able to pay monthly or on a simple pay-as-you-go-basis," it said. "This will be a new way for us to appeal to consumers who love great content but may not want the full Sky service, while offering us another new opportunity for customer growth."