BSkyB's record results mask some serious issues

Problems with rivals.

At first glance, BSkyB’s annual results merit a tick in every important box. Its key metrics all moved upwards: cross-sell rate, total customer numbers, revenue and profit all showed strong growth.

In particular, BSkyB is focused on boosting its average annual revenue per customer: that metric rose by over 5 percent or £29 to £577 compared with last year. It is a sobering stat. The average Sky customer is now paying £48 per month. It is all a far cry from the early days of satellite television.

The writer is old enough and sufficiently nostalgic to recall signing up to the short-lived Sky rival, British Satellite Broadcasting at the princely rate of £10 per month. Circa 1990 – give or take. It also came complete with a relatively natty squarial dish.

Release of Sky’s results also serves as an annual reminder – at least for some of us – of just what good value the BBC offers at a fraction of the cost:  a snip at £145 per year. Back at Sky, revenues rose 7 percent year-on-year to £7.2bn; pre-tax profits rose by almost 6 per cent to £1.26bn.Customer numbers inched up a tad (by around only 34,000) to 10.4m, perhaps suggesting that the market may be nearing saturation. Sky’s response is to ramp up its efforts to grow its Now TV offering, launched as a direct rival to Netflix and Amazon’s LoveFilm.

Sky said that more than 50,000 customers have used its £9.99 per day sports ‘day pass’ on Now TV, aimed at non-Sky subscribers. Sky is also launching a Now TV set-top box for £9.99, targeted at non-Sky subscribers, enabling them to connect their TV to the internet.

Future targets for Sky include boosting its numbers of customers – currently around 35 percent - who opt to take the full bundled service of television, telephone and broadband. Officially, Sky is relaxed about the growing threat posed by rival BT.

If you believe that, you will believe anything.

A marketing war of sorts has blown up between BT and Sky. BT has spent a reported £1bn to buy sports rights for its TV service and is offering them for free to its broadband customers from August. BSkyB in turn is to offer free broadband to subscribers to its sports channels. If you believe BT and Sky’s PR teams, this means that customers are the winners.

If there is a winner out there it is the English Premier League and other sports rights holders. The cost to broadcasters of valuable sports rights continues to soar. In the markets, BT is outscoring Sky, with Sky shares down this morning by 3.5 percent to 820p; they are down almost 10 percent from a year-high of 905p.

By contrast, BT shares rose by 0.5 percent this morning to 336p and have soared by 44 percent since the turn of the year.

Two last points on Sky’s future plans. It said that it will add more channels - including 20 new channels to its catchup TV service. Just what we all need. Yet more channels. On a positive note, at a recent Digital Banking Club debate I chaired, the star-turn was a presentation from Steph Coleman, director of customer journeys for BSkyB. Coleman is on a mission, backed up with serious investment, to make Sky’s customer service experience the best in the country. Her presentation was mighty impressive; I would back her to get results.

Photograph: Getty Images

Douglas Blakey is the editor of Retail Banker International

Getty
Show Hide image

How Theresa May laid a trap for herself on the immigration target

When Home Secretary, she insisted on keeping foreign students in the figures – causing a headache for herself today.

When Home Secretary, Theresa May insisted that foreign students should continue to be counted in the overall immigration figures. Some cabinet colleagues, including then Business Secretary Vince Cable and Chancellor George Osborne wanted to reverse this. It was economically illiterate. Current ministers, like the Foreign Secretary Boris Johnson, Chancellor Philip Hammond and Home Secretary Amber Rudd, also want foreign students exempted from the total.

David Cameron’s government aimed to cut immigration figures – including overseas students in that aim meant trying to limit one of the UK’s crucial financial resources. They are worth £25bn to the UK economy, and their fees make up 14 per cent of total university income. And the impact is not just financial – welcoming foreign students is diplomatically and culturally key to Britain’s reputation and its relationship with the rest of the world too. Even more important now Brexit is on its way.

But they stayed in the figures – a situation that, along with counterproductive visa restrictions also introduced by May’s old department, put a lot of foreign students off studying here. For example, there has been a 44 per cent decrease in the number of Indian students coming to Britain to study in the last five years.

Now May’s stubbornness on the migration figures appears to have caught up with her. The Times has revealed that the Prime Minister is ready to “soften her longstanding opposition to taking foreign students out of immigration totals”. It reports that she will offer to change the way the numbers are calculated.

Why the u-turn? No 10 says the concession is to ensure the Higher and Research Bill, key university legislation, can pass due to a Lords amendment urging the government not to count students as “long-term migrants” for “public policy purposes”.

But it will also be a factor in May’s manifesto pledge (and continuation of Cameron’s promise) to cut immigration to the “tens of thousands”. Until today, ministers had been unclear about whether this would be in the manifesto.

Now her u-turn on student figures is being seized upon by opposition parties as “massaging” the migration figures to meet her target. An accusation for which May only has herself, and her steadfast politicising of immigration, to blame.

Anoosh Chakelian is senior writer at the New Statesman.

0800 7318496