UPDATE 2-BSkyB nears customer goal, ups pressure on Murdoch

* Adds 96,000 net customers in Q1, total at 9.96 million

* Adjusted operating profit beats forecasts at 255 mln stg

* Says “business as usual” despite News Corp bid

* Shares up 0.4 pct at 700 pence bid price

(Adds details, quote)

By Kate Holton

LONDON, Oct 22 (BestGrowthStock) – Britain’s dominant pay-TV group
BSkyB (BSY.L: ) attracted more customers than expected and sold a
record number of services in the first quarter, boosting profits
and raising the pressure on News Corp (NWSA.O: ) to up its bid.

Chief Executive Jeremy Darroch told reporters BSkyB was
getting on with “business as usual” and had not been affected by
the looming offer as it edged closer to hitting its long-term
target of 10 million customers by the end of 2010.

“Our focus is the business and as you can see today the
business continues to perform very strongly and we’re going to
stay single-mindedly focused on that,” Darroch said. “(We’re)
within touching distance of our goal of 10 million homes.”

BSkyB’s independent directors have rejected a 700 pence per
share offer from Rupert Murdoch’s News Corp to buy the 61
percent of the company it does not already own. [ID:nLDE68F0PF]

They have instead asked for more than 800 pence but said
they will put price discussions on hold while they work with
News Corp to seek regulatory approval.

British-based analysts believe News Corp will have to up its
offer to around 800 pence and the latest set of results are
likely to support that thinking.

Its stock rose 0.4 percent to 700 pence by 0923 GMT, valuing
the group at more than 12 billion pounds ($18.95 billion).

BSkyB said on Friday it had added 96,000 net new customers,
compared with a Reuters poll expecting 77,000, while it set a
record for the number of net products sold in the period. It
also beat forecasts with strong growth in broadband.

The strong operating performance, which took the total
customer base to 9.96 million, helped BSkyB to post adjusted
operating profit up 25 percent to 255 million pounds, compared
with a Reuters poll average of 235 million pounds.


Churn, or the percentage of customers who left the service,
was steady on last year at 11.2 percent despite what the company
described as a “challenging” environment, while the average
annual revenue generated per user hit a record of 514 pounds.

The amount paid by each customer has risen sharply in recent
years due to the sales of additional products such as HD TV and
broadband. BSkyB said some 2.3 million customers now took all
three main products of TV, broadband and telephony, which was up
by 39 percent.

Its latest new offering — a full on-demand service with
movies as well as entertainment shows, documentaries and classic
sport — will roll out from the end of October. It launched
Europe’s first dedicated 3D channel this month.

“Our focus as a management team is to execute the strategy
and run the business as well as we can because we know
ultimately that if we do that, that will be in the interests of
all our shareholders,” Darroch said.

Analysts said the News Corp deal would drive BSkyB stock.

“While we see scope for the shares to track back above 700
pence (after drifting down by recently going ex-dividend), the
more important factor is the potential and timing for a
potential deal with News Corp,” Citi analysts said.

“As a result, despite mild upward pressure to consensus
estimates on the back of the strong 1Q, the results are unlikely
to be the main driver of share price performance near term.

“Overall, though, we are positive on the potential for a
deal to complete and see fair value at/above the 800 pence
level. We are buyers of BSkyB.”
(Reporting by Kate Holton; Editing by David Jones and Michael

UPDATE 2-BSkyB nears customer goal, ups pressure on Murdoch