BSkyB full-year operating profit +9%

Sky’s planned £500 million share buyback should see shareholders happy, but ultimately the battle for subscribers will be more important over the next year.

Hot on the heels of BT’s figures yesterday, BSkyB has posted its year-end results. The firm has seen full-year operating profits increase by 9% to £1.3 billion, and a large part of this must be attributed to the fact that subscribers have been willing to spend an average of £577 a year. However, the emergence of BT’s sports package is anticipated to start a price war between the two firms as they battle for market share. One likely consequence of this will be an end to the almost annual 3% inflationary price increases that Sky has been able to levy on its subscribers. A reversal of this trend could emerge over the next year.

When considering how seriously to take this new business plan from BT, it is worth noting that it is itself a FTSE 100 company, and as such has considerably deeper pockets than previous challengers such as Setanta. Being able to fork out £1 billion for sporting rights so far is in itself a statement of intent. But as BT has only been able to sign up 500,000 subscribers, and the majority of those are free due to already being BT broadband holders, it is a long way away from seeing any profits.

The shoe is now on the other foot: after years of Sky pinching BT broadband users, BT is now trying to poach Sky’s sports viewers. The battle lines have been drawn.

British Sky Broadcasting plc chart

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