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BSkyB 1st half net up 8 pct; customer gains help offset falling ad revenue
LONDON (AP) ' British Sky Broadcasting PLC saw its profits rise 8 percent in the first half of its financial year as an increase in customer numbers helped offset a drop in advertising revenue.
Britain's biggest broadcaster by revenue said Tuesday that its net profit in the six months ending 2011 rose to 441 million pounds ($692 million) from 407 million pounds a year earlier.
Revenue at the company, which is 39 percent-owned by Rupert Murdoch's News Corp., was up 6 percent to 3.4 billion pounds, while the dividend was raised 5 percent to 9.2 pence per share.
The company's solid results and dividend hike helped BSkyB shares rally 3.2 percent to 687 pence in early trading in London. Sky shares have been hit hard this year, partly because of the fallout from the hacking scandal involving the News of the World tabloid, which was part of News Corp. until it was shut down. One of the major impacts of the scandal was News Corp.'s shelving of its bid to buy the shares in BSkyB it doesn't already own.
BSkyB's results were helped by a 321,000 increase in customer numbers during the period, while subscriptions to various products, notably broadband and telephone, increased by 772,000.
Despite its further advance, there are concerns over the company's prospects, which is chaired by James Murdoch.
Steve Liechti, analyst at Investec Securities, is cautious about BSkyB because of possible competitive and regulatory problems.
He noted that auctions for football rights, which have been a key to building BSkyB, will be up for renewal in upcoming quarters. The company also faces growing competition in subscription video on demand.
Alongside its results, BSkyB announced that it was planning a cable-based broadband offering with unlimited usage, delivered via the cable network of telecoms company BT PLC.
Chief Executive Jeremy Darroch said he expected a tough year ahead, given Britain's sluggish economy and the squeeze on household incomes.
"No consumer business can be immune to these conditions and we will manage any short-term headwinds as they emerge," Darroch said. He added that BSkyB was planning more original productions and is launching a channel dedicated to Formula 1 auto racing.