Shares digital

BskyB (BSY) – Interims PTP: -£36m (£356m) Divi: 7.1p (6.6p)

Results from the media giant were well received by the market after it gave an upbeat outlook and said that woes about consumer spending will not dent its long-term target of reaching ten million customers by 2010.

Its churn rate of 10% was much lower than the 10.5%-10.8% analysts had been been fearing, while it clocked up 385,000 new customers. It also says it is now the UK’s fastest-growing broadband provider, with 260,000 subscribers. Chief executive Jeremy Darroch says that its decision to increase the dividend by 8%, to 7.1p is a reflection of its confidence in the future.

The company moved into pre-tax losses due to a £343 million impairment charge relating to its 17.9% stake in fellow broadcaster ITV (ITV). At the time of the purchase in November 2006 the stake was worth some £940 million but ITV’s share price has plummeted by 37% to 69.5p since then.

Regulators have ordered Sky to sell down its stake due to competition issues, and Sky is considering whether or not it should appeal the decision.

After results the company announced plans to raise £384 million through a private placing to refinance existing debts. The bonds to institutional investors will mature in 2018, with the offer expected to close on or around 15 February.

The shares have been fairly volatile over the past few months but the results led analysts to maintain their buy and overweight recommendations, with UBS setting a target price of 900p and Morgan Stanley a 715p target, considerably higher than their current 550p levels.

Shares says: Solid results that are better than expectations, but the concerns over its ITV stake are likely to weigh on sentiment in the short term.

by: Susanna Twidale