British Sky Broadcasting PlcÆs share price hit a two-year high yesterday after the company reported the rapid uptake of its satellite digital broadcasting service, and plans to give its digital decoders away free to subscribers. The $512m ploy is thought to be used as a bargaining chip when the lucrative TV rights to UK Premiership football come up for renewal next year. Also well-received was SkyÆs plans to venture into the internet service provider arena. At the close of trading Wednesday, SkyÆs shares stood at 6.05 pounds ($9.85), 11.82% above the days opening price.
After the first six months of Sky Digital, the firm has signed 551,000 subscribers, of which 220,000 were new to Sky, rather than customers switching from analog. The company says it is on track to hit its one million customer target in October.
Sky announced it is to become a reseller of British Telecommunications Plc network capacity, buying in bulk and selling time on at 40% to SkyDigital subscribers. And on June 1, a subscription-free ISP, Skynow, will go live, offering internet access using the model made popular by Dixons Freeserve, but with the 40% discount applying to dial-up charges. The offer will be subsidized with a 2 pound per month price hike for digital subscriptions, due to hit customers who join after the end of May.
Dividends have been suspended for the foreseeable future, and the cash will be used to buy up market share. SkyÆs quarterly profits to March 31 fell to 11.7m pounds ($19m) from 68m pounds ($110.7m) in the year ago period, due to heavy investment in the launch of Sky Digital. Revenues increased from 368m pounds ($599m) to 391m pounds ($636.7).
