FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a - 16 or 15d - 16 of
the Securities Exchange Act of 1934
For the month of November 2002
(8 November 2002)
BRITISH SKY BROADCASTING GROUP PLC
(Name of Registrant)
Grant Way, Isleworth, Middlesex, TW7 5OD England
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F
Form 20-F X Form 40-F
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934
Yes No X
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): Not Applicable
EXHIBIT INDEX
Exhibit
1 Press release of British Sky Broadcasting Group plc
announcing 1st Quarter Results released on 8 November 2002
Exhibit 1
8 November 2002
BRITISH SKY BROADCASTING GROUP PLC
Results for the three months ended 30 September 2002
Sky reports 69% increase in operating profit
- Highest first quarter DTH subscriber growth for 9 years of 217,000
- Total DTH subscribers of 6,318,000
- Churn falls to 9.6%
- ARPU up 10% to GBP348
- SAC down 11% to GBP212
- DTH revenue increases by 23% to GBP538 million
- Advertising revenue increases by 12% to GBP60 million
- Operating profit before goodwill increases by a record 69% to GBP75
million
- Profit before tax and goodwill of GBP43 million
Tony Ball, Chief Executive of British Sky Broadcasting Group plc, said:
"This has been a record breaking quarter for Sky. The highest first quarter
subscriber growth for 9 years, the lowest churn since the launch of Sky digital
and falling subscriber acquisition costs, have delivered a 69% increase in
operating profit. These results provide the foundation for continued strong
profit growth this year."
Enquiries:
Analysts/Investors:
Neil Chugani Tel: 020 7705 3837
Andrew Griffith Tel: 020 7705 3118
E-mail: investor-relations@bskyb.com
Press:
Julian Eccles Tel: 020 7705 3267
Robert Fraser Tel: 020 7705 3036
E-mail: corporate.communications@bskyb.com
Portland:
Tim Allan Tel: 020 7404 5344
A conference call for UK and European analysts will be held at 8.30 a.m. (GMT)
today. To register for this, please contact Diane Barnes at Portland PR on +44
20 7404 5351. A live webcast of this call will be available on Sky's corporate
website (www.sky.com/corporate) and available to replay.
There will be a separate conference call for US analysts at 9.30 a.m. (EST)
today. Details of this call have been sent to US institutions and can be
obtained from Nikki Sheridan at Taylor Rafferty on +1 212 889 4350.
OPERATING REVIEW
At 30 September 2002 the total number of direct-to-home (DTH) digital satellite
subscribers in the UK and Ireland was 6,318,000. The net increase of 217,000
subscribers in the three months to 30 September 2002 (the quarter), represents
record first quarter growth since the launch of Sky digital in October 1998 and
puts Sky comfortably on track to achieve its target of 7 million DTH subscribers
by the end of the calendar year 2003.
Digital churn for the quarter (annualised) fell from 10.5% in the three months
to June 2002, to 9.6%. This is the lowest level of total churn recorded since
the launch of Sky digital, reflecting the early benefits being realised of Sky's
significant recent investment in its customer relationship management centres.
The quarterly annualised average revenue per DTH subscriber (ARPU) in the
quarter was GBP348, an increase of 10% over the three months ended 30 September
2001 (the comparable period) and in line with ARPU reported for the quarter to
30 June 2002. ARPU remains firmly on track to reach Sky's target of GBP400 in
2005. All subscribers are now subject to the price rise introduced in January
2002 and the recently announced price rises for the UK, which take effect from
January 2003, will be reflected in ARPU from the third quarter of this financial
year.
At 30 September 2002, there were 75,000 subscribers to the Extra Digibox and
38,000 subscribers to Sky+, representing an increase of 41% and 37% respectively
in the quarter. The continued growth of these new products will be supported by
the recent launch of a promotion to encourage take-up of a dual Sky+ and Extra
Digibox subscription and the launch of a low cost Extra Digibox option.
Sky's channels continue to increase their viewing share across UK television
homes and consistently deliver the best programmes to their viewers. Dinotopia,
a new series this September on Sky One, generated over one million viewers for
each episode. Sky Sports is as popular as ever. During the quarter, it achieved
record audiences for both the Super League and The Ryder Cup and the Nationwide
League season has experienced a strong start. In multi-channel homes, Gillette
Soccer Saturday is now the football results magazine programme of choice,
consistently out-rating the BBC's Grandstand and ITV's Goal Rush. Coming up
this month is exclusive live coverage of the England Rugby Union internationals
against New Zealand, Australia and South Africa, with eight-screen interactivity
offered for the first time in this sport and the current Ashes cricket tour with
every Test and One-day International exclusively live on Sky Sports.
On 24 September 2002, Sky's bid was accepted for the rights to certain UEFA
Champions League football matches from the 2003/4 season to the end of the 2005/
6 season, subject to agreeing long form documentation. Sky will have exclusive
live coverage of six matches on Tuesdays, eight matches and a full highlights
programme on Wednesdays and rights to simulcast the Final live. In total, 102
Champions League matches will be shown exclusively live on Sky each season,
allowing viewers to choose between games using the unique interactive features
of Sky Sports Active.
Freeview, the new free-to-air digital terrestrial television (DTT) offering, was
launched on 30 October 2002. Sky is supplying three channels on DTT - Sky News,
Sky Sports News and Sky Travel - increasing the awareness of the Sky brand and
delivering on the Company's vision to distribute Sky content to every UK home.
FINANCIAL REVIEW
The operating gearing inherent in Sky's business model is now delivering
accelerating profit growth. Operating profit before goodwill for the quarter
increased to GBP75 million, an increase of 69% on the comparable period. The
Group made a profit before tax of GBP14 million, compared to a loss of GBP89
million in the comparable period.
Total revenues increased by 13% to GBP726 million, driven principally by strong
performances in both DTH and advertising revenues.
DTH revenues increased by 23% to GBP538 million as a result of the 13% increase
in the average number of DTH subscribers, and a 10% increase in core ARPU to
GBP334.
The Group's advertising revenue increased by 12% on the comparable period to
GBP60 million, reflecting growth in the total UK advertising market, growth in
Sky's viewing share and the agency commissions earned on the sale of airtime on
the third party channels which have appointed Sky Sales to represent their
airtime sales during the last year.
As anticipated at the time of ITV Digital's closure, wholesale revenues declined
by 36% on the comparable period to GBP49 million. Excluding the one-off effect
of the closure of ITV Digital, the decline in cable revenues was 20%. This
reduction is the direct consequence of the well-publicised loss of subscribers
by both NTL and Telewest over the last six months and the continued
deterioration in the take up of premium channels amongst the remaining cable
subscribers. At the same time, the number of cable subscribers taking Sky's
basic channels, Sky News and Sky One, has increased, and these channels are now
distributed to over 90% of cable homes.
Interactive revenues were GBP44 million for the quarter, a decline of GBP3
million on the comparable period. Growth in Sky Active revenues was offset by a
reduction in gross betting revenues to GBP22 million, principally as a result of
the scaling back of the low-margin telephone-based betting service at SkyBet,
Sky's wholly owned bookmaker. By contrast, the proportion of higher-margin
interactive television betting revenues continued to grow strongly in the
quarter, with the total volume of bets placed via the remote control some 54%
higher than in the comparable period. Sky Active revenues increased to GBP22
million, largely driven by the increased usage of the Sky Gamestar portal, which
achieved an average weekly reach of 1.3 million individuals in the quarter.
Interactive ARPU, which includes only the net margin on betting rather than the
gross revenue, was GBP14, an increase of 8% on the comparable period.
Programming costs for the period increased by GBP52 million to GBP354 million,
principally as a result of volume-related increases in third party channel
costs, the increased proportion of "hit" movies shown and contractual increases
in sports rights costs, including the return of the Nationwide Football League
to Sky this season.
Other operating costs before goodwill for the quarter were broadly consistent
with the comparable period at GBP297 million. Included within these costs are
marketing costs of GBP102 million, broadly consistent with the comparable period
despite a record quarter for net subscriber additions. Subscriber acquisition
cost (SAC) has fallen by GBP25 from GBP237 for the comparable period to GBP212
for the quarter, principally as a result of the start of new set top box supply
arrangements. Sky expects to achieve its target of GBP210 for the financial year
2002/03 during the second quarter.
EBITDA for the quarter increased by 51% from GBP65 million to GBP97 million.
The Group's share of the operating losses of joint ventures fell to GBP1 million
in the quarter, a reduction of GBP30 million over the comparable period,
reflecting the cessation of equity accounting for the Group's share of losses
incurred by KirchPayTV from 8 February 2002.
After goodwill and its share of the results of joint ventures, the Group made a
profit before taxation of GBP14 million.
The tax charge for the quarter of GBP14 million is based upon the standard rate
(30%) of UK mainstream corporation tax (MCT), notwithstanding the presence of
significant unrecognised tax losses. Whilst the Group ultimately expects that it
will be able to utilise these tax losses in full in due course, differences
between the group entities in which profits arise and in which past losses have
accrued may lead to a liability to MCT arising in the current year before these
losses have been fully utilised. This liability to MCT has therefore currently
been provided for in full.
At 30 September 2002, the Group had GBP18 million of Advanced Corporation Tax
(ACT) recoverable, which is expected to be used in the current year to reduce
any MCT payable, and GBP67 million of ACT recoverable in the 2003/04 financial
year.
The Group's operating cash inflow was GBP97 million in the quarter, compared to
an operating cash outflow of GBP47 million in the comparable period. This
represented the conversion of 129% of operating profit before goodwill to
operating cash inflow. Despite substantial working capital outflows in the
quarter relating to payments for sporting rights, including payments totalling
over GBP200 million to the FA Premier League and the FA, Sky reduced its net
debt in the first quarter by GBP24 million to GBP1,504 million, from GBP1,528
million at 30 June 2002. The ratio of net debt to annualised EBITDA now stands
at 3.9, the lowest level since 1999. Sky continues to expect net debt to fall at
each balance sheet date.
CORPORATE
On 30 September 2002, Telewest announced that it had reached a non-binding
preliminary agreement relating to a restructuring with a committee representing
a significant proportion of its bonds. Telewest also announced that it will
defer payments of interest on certain of its obligations, resulting in defaults
under bank facilities and other financing arrangements, and this has led a
creditor to file a petition for its winding up. Telewest has stated that it
will deal with this claim as part of the overall restructuring and that it will
continue to meet its obligations to suppliers.
As set out more fully in the circular sent to shareholders on 8 October 2002,
resolutions are being proposed at today's Annual General Meeting for, inter
alia, the appointment of Jacques Nasser and Gail Rebuck as independent
non-executive Directors of the Company. Jacques Nasser served as a Member of the
Board of Directors, and as President and Chief Executive Officer of Ford Motor
Company, from 1998-2001. Gail Rebuck is Chairman and Chief Executive of The
Random House Group Ltd, the UK's largest trade publishing company.
On 7 November 2002 the Company filed its Annual Report on Form 20-F for the
financial year ended 30 June 2002 with the US Securities and Exchange
Commission. A copy of the Form 20-F has been submitted to the UK Listing
Authority and will be available at the UK Listing Authority's Document Viewing
Facility (which is situated at 25 The North Colonnade, Canary Wharf, London E14
5HS).
Appendix 1
Subscribers to Sky Channels
Prior Year Prior Quarter
Q1 2001/02 Q4 2001/02 Q1 2002/03
as at 30/09/01 as at as at
30/06/02 30/09/02
DTH Digital (1),(2) 5,498,000 6,101,000 6,318,000
Cable - UK 2,914,000 3,486,000 3,405,000
Cable - Ireland 602,000 605,000 594,000
DTT (3) 1,178,000 - -
Total 10,192,000 10,192,000 10,317,000
DTH Churn rate for year to date 10.4% (4) 10.5% (4) 9.6%
(annualised)
Net DTH growth in quarter 45,000 214,000 217,000
(1): Includes DTH subscribers in Ireland (255,000 as at 30 September 2002).
(2): DTH subscribers includes only primary subscriptions to Sky (no additional
units are counted for Sky+ or Extra Digibox subscriptions).
(3): On 30 April 2002, the joint administrators of ITV Digital announced their
decision to close the pay television operation of ITV Digital and, with
effect from that date, these subscribers ceased to receive any Sky
subscription channels.
(4): Excludes analogue churn up to 27 September 2001 and the effect of the
termination of the analogue service on 27 September 2001.
Consolidated Profit and Loss Account for the three months ended 30 September
2002
2001/2002
2002/2003 Three
Three months
months Before Goodwill and ended
ended goodwill and exceptional 30 September
30 September exceptional items 2001
Notes Before 2002 items Total
goodwill Goodwill Total
GBPm GBPm GBPm GBPm GBPm GBPm
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Turnover: 744.1 - 744.1 688.2 - 688.2
Group turnover
and share of
joint
ventures'
turnover
Less: share of (17.9) - (17.9) (45.5) - (45.5)
joint
ventures'
turnover
Group turnover 1 726.2 - 726.2 642.7 - 642.7
Operating 2 (651.0) (29.3) (680.3) (598.1) (29.7) (627.8)
expenses, net
EBITDA 97.4 - 97.4 64.5 - 64.5
Depreciation (22.2) - (22.2) (19.9) - (19.9)
Amortisation - (29.3) (29.3) - (29.7) (29.7)
Operating 75.2 (29.3) 45.9 44.6 (29.7) 14.9
profit (loss)
Share of 3 (0.9) - (0.9) (30.9) - (30.9)
operating
results of
joint ventures
Joint - - - - (49.2) (49.2)
ventures'
goodwill
amortisation
Profit on sale - - - - 2.3 2.3
of fixed asset
investment
Release of - - - - 10.0 10.0
provision for
loss on
disposal of
subsidiary
Profit (loss) 74.3 (29.3) 45.0 13.7 (66.6) (52.9)
on ordinary
activities
before
interest and
taxation
Interest 0.9 - 0.9 4.1 - 4.1
receivable and
similar income
Interest (32.0) - (32.0) (40.4) - (40.4)
payable and
similar
charges
Profit (loss) 43.2 (29.3) 13.9 (22.6) (66.6) (89.2)
on ordinary
activities
before
taxation
Tax on profit (13.8) - (13.8) (5.6) - (5.6)
(loss) on
ordinary
activities
Profit (loss) 29.4 (29.3) 0.1 (28.2) (66.6) (94.8)
on ordinary
activities
after taxation
Equity - -
dividends -
paid and
proposed
Retained 0.1 (94.8)
profit (loss)
Profit (loss) 1.6p (1.6p) 0.0p (1.5p) (3.5p) (5.0p)
per share -
basic and
diluted
Notes:
1. Turnover
2002/2003 2001/2002
Three months Three months
ended ended
30 September 30 September
GBPm GBPm
(unaudited) (unaudited)
Direct-to-home subscribers 538.3 437.9
Cable and DTT subscribers 48.6 75.6
Advertising 59.9 53.6
Interactive 44.0 47.3
Other 35.4 28.3
726.2 642.7
2. Operating expenses, net
2002/2003 Before Goodwill 2001/2002
Before Goodwill Three months goodwill GBPm Three months
goodwill GBPm ended GBPm ended
GBPm 30 September 30 September
Total Total
GBPm GBPm
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Programming (i) 354.3 - 354.3 302.6 - 302.6
Transmission and 37.8 - 37.8 43.9 - 43.9
related functions
(i)
Marketing 102.4 - 102.4 100.2 - 100.2
Subscriber 77.6 - 77.6 73.8 - 73.8
management
Administration 58.1 29.3 87.4 51.9 29.7 81.6
Betting (ii) 20.8 - 20.8 25.7 - 25.7
651.0 29.3 680.3 598.1 29.7 627.8
(i) The amounts shown are net of GBP1.6 million (2001/2002 three months ended
30 September: GBP1.8 million) receivable from the disposal of programming
rights not acquired for use by the Group, and GBP6.0 million (2001/2002
three months ended 30 September: GBP7.7 million) in respect of the
provision to third party broadcasters of spare transponder capacity.
(ii) Betting comprises the cost of payouts for winning bets placed through the
Group's wholly owned bookmaker, Surrey Sports. Bets can be placed via the
telephone, the internet or via the Group's interactive television services.
3. Share of operating results of joint ventures
2002/2003 2001/2002
Three months Three months
ended 30 September ended 30 September
GBPm GBPm
(unaudited) (unaudited)
Joint ventures:
KirchPayTV - 28.7
Programming joint ventures, net 0.9 2.2
0.9 30.9
This relates to the Group's equity share of the operating results of the
Group's joint ventures.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BRITISH SKY BROADCASTING GROUP PLC
Date: 8 November 2002 By: /s/ Dave Gormley
Dave Gormley
Company Secretary