Increased BskyB Profit Puts Pressure on Rupert Murdoch
A 59% hike in net profit to $650 million will push up the price Murdoch will have to pay in his attempt to buy the company.
LONDON -- BSkyB reported a 59% hike in net profit to £407 million ($650 million) it in the first half of the year on revenues up 15% at £3.2 billion ($5.1 billion), all of which is bad news for Rupert Murdoch.
The recession-busting performance from the British satcaster -- in which News Corp. has a 39% stake -- will push up any price tag Murdoch will have to pay in his controversial attempt to buy the company outright.
At the same time sterling/dollar fluctuations are trending towards making the deal more expensive.
With the combination of first run movies, live Premier League soccer and new content offerings like upcoming high-end drama channel Sky Atlantic, Sky's track record at innovation has proved both downturn-proof and industry leading.
On Thursday the company said it had added 140,000 new customers overall in the three months to Dec. 31, surpassing its target of 10 million customers by the end of 2010 and selling 343,000 new high-definition TV packages and 204,000 broadband packages.
BSkyB CEO Jeremy Darroch said the business had delivered "a half year of outstanding performance, with record product sales and strong double-digit growth in revenue, profit and cash flow."
Despite stressing a cautious outlook n the next 12 months, Darroch said he remained "very confident " about the company's long-term prospects. Shares in the company hit a year-high of 773p on the news of an 11% increase in dividend payments.
Analysts said the continued growth meant that shareholders would not accept a discount sale price. "BSkyB's strong results strengthen the board's position that it will not accept less than 800p from News Corp.," said Jefferies analyst Nick Bell.
BSkyB also said that it spent £7 million ($11.2 million) handling the takeover bid, which has triggered a number of regulatory inquiries.
News Corp. chief executive Rupert Murdoch is currently in London, overseeing bid discussions with U.K. Culture Secretary Jeremy Hunt.
Hunt has to decide whether the deal would give News Corp. excessive control of public opinion in the U.K.