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BSkyB CEO: VOD Changes Nothing, Free Is Difficult

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UK satcaster BSkyB (NYSE: BSY) CEO Jeremy Darroch channeled much the same belief in paid content as its its largest shareholder News Corp (NSDQ: NWS). while discussing healthy growth from the last financial year with investment analysts Thursday morning…

Asked if the rise of video-on-demand options threaten pay-TV, Darroch said:

“I don’t see anything in terms of free-to-air or VOD offerings that change anything in the marketplace. I see the comparison as free versus paid

Free is tough, right? It’s hard to monetise, it’s hard online. Pay is different – I don’t see that shifting the trends we have seen over the last few years (impact that)”

Asked if Sky would embrace free TV channels, he said…

“We have no plans to launch any free-to-air channels – we like pay. We’re going the other way – Sky Sports News has come in behind the paywall from end of August.”

But that doesn’t mean Sky isn’t wedging paid subs in to free platforms – it now offers subscriptions through Xbox, Windows Media Centre, hybrid Freeview boxes from FetchTV, Cell, 3View and Humax, and Sky Sports subscriptions through BT (NYSE: BT) Vision’s hybrid Freeview box.

Sky already offers its existing premium subscribers web-based VOD through its own Sky Player, but gives no indication as to its take-up. Sky Anytime+, finally offering true pull VOD to TV customers, is due to launch before year’s end.

The year to June 30 was another of growth across the board for BSkyB.

— It added 119,000 net broadband customers, and 958,000 net adds across the portfolio, taking it to a total 11.7 million customers.

— A fifth of customers now take TV, broadband and telephone.

— Average annual revenue per customer is up to £508, from £464 a year ago.

Operating profit is up 10 percent to £855 million ($1.33 billion) on 11 percent higher revenue of £5.91 billion.

On personalised TV ad targeting (which Sky has been trialing for some time; partly in talks with Google), Darroch said: “We have the core PVR technology and we have no expectation of doing anything major this year.”

On News Corp.’s bid to buy the 61 percent of Sky it does not already own, Sky says this “is not a formal offer” but…

“Recognising that an offer from News Corporation could be in the interests of BSkyB shareholders in the future, and that obtaining any necessary merger clearances would facilitate such an offer, BSkyB has agreed to co-operate with News Corporation in seeking those clearances from the relevant authorities.” It’s making its board director Nicholas Ferguson deputy board chairman while existing board directors join a committee to deliberate on the offer.

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