As you’d expect from a CFO, it was a metric-heavy presentation from BSkyB’s (NYSE: BSY) Jeremy Darroch at the UBS Global Media & Communications conference in New York. After reviewing the company’s past quarter, Darroch got to the point: BSkyB is growing strong regardless of which metric you use.
Growth: Broadband and telephony has helped the company triple gross product sales in four years. BSkyB is the fastest growing UK broadband provider; major cost savings compared to Virgin Media. New customer typically costs £251, but ARPU is £411, so investing in new customers is a worthwhile investment. Pay TV operating margins are now 22 percent; this is expected to grow to the high 20s by 2010. Greater efficiencies can be achieved via lower churn rates and upselling customers and more services.
Online advertising: Broadband growth will find opportunities to online advertising. Darroch didn’t get into how the company plans to do that, though.
International opportunities: International acquisitions are possible, but for now, the company is mainly interested in UK expansion.
Subscriber management: #1 priority is improved customer service, which creates efficiencies via shorter customers calls.
Churn: No reason churn couldn’t be reduced to single digits, from 10 percent where it is now. Certain things are unavoidable, like death and divorce. Company churn remains below industry average of over 11 percent.
Broadband penetration: Most of the new customers are not customers that didn’t have broadband, but rather customers coming from competitors. Subscribers are enthusiastic about cost savings.
Network performance: Company is able to remain competitive with Virgin Media (NSDQ: VMED) while spending less, because it’s all digital. Virgin still has a lot of analog, bandwidth-hogging customers. Company saves bandwidth because it has satellite side delivering HD and BSkyB. Customers are more interested in service than how it’s delivered.
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