BSkyB strikes again. They’ve had a slowdown in subscriber numbers with a rise in profit. This is definitely bucking the trend.
These guys are experts in bottom line cross-selling balanced by an decent increase in selling products including broadband and telephony to existing customers.
Hey, Where’s The Slump?
Industry experts were expecting a massive slump in this sector and indeed many companies have seen massive drops. However, when you’re the dominant market leader in your marketplace, economies of scale and tapping an existing client bank gives you significant example.
It’s this ability to squeeze its existing client bank that makes this company a force to be reckoned with.
Deal Falls Through
Bear in mind, BSkyB was in the process of being taken over by its largest shareholder earlier this year (Newscorp) until that dreadful phone-hacking scandal broke. This deal broke down and allowed BSkyB the breathing space to get on with running their very profitable business.
BSkyB operating profit was reported to be £327m, a 32% year-on-year increase, this was boosted nicely by a £39m payout by News Corp for ducking out of the purchase netting them £7m in costs for advisory fees.
The economic downturn has forced BSkyB to change its culture of obtaining as many subscribers as possible and is looking to roll out a new and targeted strategy of cross selling to its existing client base. By changing strategy they managed to 26,000 new pay-TV customers in the quarter, taking the total subscriber base to 10.2 million, which is well down on the almost 100,000 added in the same quarter last year.
* Sold a total of 683,000 products to customers in the three months to the end of September
* Added 103,000 customers to its HD service
* Has 3.9 million of its total subscriber base
* Broadband numbers rose 150,000 to 3.5 million
* Telephony customers rose 147,000 to 3.2 million
* line rental through BSkyB rose 212,000 to 2.9 million
* TV, broadband and a “talk” product increased by 5% to account for 28%
of BSkyB’s total customer base – that’s a whopping 29% year-on-year increase.
Now those are impressive figures!
BSkyB chief executive, Jeremy Darroch said:
“In tough market conditions our move to more broadly based growth and multiple products is serving us well,”
he said. “Looking ahead, the environment is likely to remain challenging as a result of the pressures facing
consumers in the UK and Ireland.”
With this success, BSkyB is looking to expand this format to other European countries after the pay TV broadcaster reported strong growth in first quarter profits and said its growing telephony and broadband businesses.
Unsurprisingly, shares in BSkyB were the biggest riser in the FTSE 100 at 11.46 am, up 38.5p – or 5.7pc – at 713.5p.