BSkyB has launched a £10 TV box allowing viewers to watch on-demand services in an effort to counter the threat of BT, which under its Scottish chief executive Ian Livingston has started offering top flight football to customers.
The broadcaster posted better than expected adjusted pre-tax profit of £1.3 billion, up 10% on last year, helped by customers taking on extra services bringing their average annual bill to £577. But investors remain concerned about the impact of BT's move into television on BSkyB and its shares fell 28p to 822p.
Chief executive Jeremy Darroch said: "We expect the consumer environment to remain challenging over the coming twelve months.
"Against that backdrop, we have a strong set of plans that will extend our leadership in core areas – on screen, in home communications and in front-line service delivery; accelerate growth in new services; and improve efficiency to build a bigger, more profitable business for shareholders."
BSkyB said it would invest about £70m in the next financial year to improve on-demand programming and connectivity.
Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: "The metrics are almost overwhelmingly positive – improvements to revenues, net profit, total customers and plans to invest further in broadband TV. However, the spectre of BT's current strength is looming large and despite the fact that Sky has clearly come out fighting, investors are currently favouring BT in what is becoming an increasingly compact space."
BT's sports channels will be free to its broadband subscribers and give viewers 30 Scottish Premier League games over the course of the season, and a further 10 Rangers games. The company will show 38 Premier League games from England.
In an effort to counter the threat Sky is offering its Now TV box which costs £9.99 and wirelessly connects a TV to a broadband connection, giving contract-free access to BBC iPlayer Sky News and Now TV. Through Now TV, viewers can also pay to watch Sky Sports and Sky Movies.
The device also allows people to catch up on previously-broadcast programmes.
The Now TV device will also challenge the £299 YouView box, a joint venture between BT, TalkTalk, the BBC, ITV, Channel 4, Channel 5 and Arqiva which also offers on-demand TV for free. The move is seen as consistent with BSkyB's typical approach of providing technology to enable customers to pay increasing amounts to access premium content such as sports and movies.
Sky said 35% of its customers are now taking TV, broadband and phone services, up from 32% last year. That helped grow revenues 7% to £7.2bn.
BSkyB also announced plans to buy back £500m of shares to boost returns to investors.
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