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Murdoch under pressure to seal BSkyB deal as profits rise 26%

Media tycoon Rupert Murdoch faced intense pressure yesterday to get fast regulatory approval for a takeover of BSkyB after the satellite broadcaster lifted first-half profits by 26% on strong demand for broadband services.

BSkyB said pre-tax profits rose to £467 million in the last six months of 2010, with revenues up 15% to £3.2 billion.

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Mr Murdoch’s News Corporation has offered to buy the 61% of BSkyB it does not own and faces a six-month competition inquiry if it cannot allay fears such a move will give too much control over public opinion to the Australian-born magnate.

The company already owns daily national newspapers the Sun and the Times as well as the Sunday Times and the News of the World.

As BSkyB consistently posts strong results, City analysts say the pressure will only increase for News Corp to raise its bid. Analysts at brokers Charles Stanley said News Corp may have to pitch its offer at 850p after shares in BSkyB rose nearly 1%, or 5p to 762.5p in London dealing. BSkyB rejected a 700p-a-share bid proposal from News Corp in the summer.

BSkyB, one of the most successful pay-TV groups in Europe, is adding customers at breakneck speed and selling them an increasing number of products, while reaping benefits from an investment cycle and cost-saving programmes.

Among its top shows is Mad Men, a series about the New York advertising industry.

The number of Sky customers increased by 140,000 in the final quarter of 2010 as it reported the fastest broadband growth for more than two years and a 68% increase in subscriptions to high definition television.

Jeremy Darroch, the broadcaster’s chief executive, said more customers were opting to buy broadband internet access and phone services from the firm, adding to “a half year of outstanding performance.”

Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers, commented: “Despite the inevitable distractions of the News Corp bid, Sky continues to power ahead regardless. Its recent growth trajectory has been maintained, with the 10-million customer mark having been surpassed by the end of last year as forecast.”

He added: “The News Corp situation could drag on for a while yet, but in the meantime Sky is firing on all cylinders in the background. Even though the shares have gained some 38% over the last year, as compared to a gain of 14% in the wider FTSE-100 (index), market consensus maintains that the shares are a cautious buy.”

This week, Culture Secretary Jeremy Hunt said he was minded to refer News Corp’s bid to the Competition Commission but gave the group more time to deliver undertakings.

In the past few days, BSkyB has sacked football pundit Andy Gray and seen presenter Richard Keys resign following a row over sexist comments.

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