BSkyB plunges into the red

Satcaster says economic slowdown is being felt

LONDON -- British Sky Broadcasting swung into the red Thursday, posting full-year net losses of 127 million pounds ($251.5 million) -- compared with a profit of 499 million pounds the previous year -- despite revenue jumping 9% to 4.95 billion pounds ($9.8 billion).

Shares in the U.K. satcaster dropped 4.4% to 4.27 pounds ($8.46) on news of the losses, which were attributed to the renewal of the Premier League soccer contract and ongoing write-downs in that value of its 17.9% share in commercial broadcaster ITV. BSkyB paid 1.36 punds ($2.69) per share for the ITV stock, which is now trading at 0.42 pounds (83 cents) per share.

BSkyB reported earnings before interest, tax, depreciation and amortization of 970 million pounds ($1.9 billion), down marginally from last year's 1 billion pounds. The satcaster added 92,000 new subscribers in the three months ending June 30, its highest fourth-quarter jump for four years. But CEO Jeremy Darroch said that the "difficult consumer environment" remained a factor, though he predicted "good headroom for profitable growth" in the year ahead.

"There is no doubt that it is tougher out there. With a sharp economic slowdown, no consumer business is immune," he said. "We have to see how that develops over the next few months, but we have seen a good quarter and a good set of results in a difficult consumer environment. The outlook is for growth over the medium term."

BSkyB spent a total of 1.7 billion pounds ($3.4 billion) on programming costs, of which 929 million pounds ($1.8 billion) was spent on sports. Movie spending totaled 281 million pounds ($556.5 million), down 4 million pounds ($7.9 million) over the year, while news and entertainment costs accounted for 205 million pounds ($406 million).

UBS analyst Daniel Kerven said the results were "strong" and "ahead of expectations" but predicted a further slide in earnings based on lower returns from its channels' wholesale business and continued tough times in the advertising market for ITV.
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