BROADCASTER BSkyB reported a 40% leap in first quarter profits – as strong demand for high definition TV helped offset a rise in the number of customers leaving the group.
The broadcasting giant reported pre-tax profits of £180m up from £129m a year earlier.
It also posted better-than-expected figures for net customer additions – those joining the group less those leaving – of 94,000 in the three months to September 30.
But its rate of customer churn, measuring the proportion of customers leaving Sky, rose to 11.3% from 9.9% in the previous quarter after it increased the price of direct-to-home subscriptions and took a more cautious line with customers in arrears.
It also said moves to switch 7m viewing cards as part of routine security efforts had affected customer retention.
Sky said the card switch-over prompted some customers to reconsider their options and quit the service.
But the company said another 287,000 Sky +HD net customers joined the group in the quarter – a three-fold increase on a year ago as it continued to benefit from slashing the cost of an HD box from £150 to £49 earlier this year.
Marketing costs rose by £37m to £245m, reflecting the investment in HD.
Sky said it was adding another HD channel to take the total number to 35 as it put faith in demand for HD strengthening further despite a still-tough consumer environment.
Overall revenues rose by 10% to £1.38bn in the first quarter, while operating profits increased by 9% to £198m.
It held administrative costs flat year-on-year, which helped boost earnings and counteract the money being pumped into HD.
Chief executive Jeremy Darroch said: “Our business has made a good start to our 2010 financial year with another quarter of strong results. In what continues to be a tough economic environment, we have increased the number of customers joining Sky.”