UK satellite TV company BSkyB's pretax profit surged in its third quarter as it added 95,000 subscribers, ahead of analyst estimates. Pretax profit excluding goodwill and exceptional items for the three months to March 31 rose to 209 million pounds ($396 million) from 135 million pounds a year earlier, the company said on May 04. Revenues climbed 9 percent to 1.02 billion pounds. Despite the strong subscriber and profit numbers, analysts voiced concerns about higher marketing costs and an uptick in churn, or the percentage of customers who left Sky during the quarter.
Sky, which has launched an aggressive marketing campaign as part of Chief Executive James Murdoch's controversial growth strategy, said marketing costs increased by 80 million pounds to 379 million pounds, or 13 percent of revenue.
Murdoch's strategy has received mixed reviews from investors and analysts, some of whom are concerned the company may pay too high a cost to win new subscribers. Murdoch is the son of media mogul Rupert Murdoch, whose News Corp conglomerate owns more than a third of the company.
"There were very good net addition numbers but there will be concerns about the increase in churn, and the marketing numbers were higher than expected," Numis analyst Paul Richards said.
BSkyB shares retraced an early rise and were down 0.8 percent at 528-1/2 pence, with the growth in subscribers overshadowed by the increase in churn.
Sky, which had more than 7.7 million subscribers as of March 31, said it is on track to reach 8 million subscribers by December 31, 2005.
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