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BSkyB underlying earnings improve in Q3

BSkyB underlying earnings improve in Q3

April 28th, 2011 by ROBERT BARR, Associated Press in News

LONDON (AP) - British Sky Broadcasting on Thursday reported that its third quarter profitability and revenues had risen, although net profit was down 39 percent from a year earlier, when the company had booked one-time gains.

BSkyB, which is awaiting a regulatory decision on a potential takeover by Rupert Murdoch's News Corp., reported a net profit of 174 million pounds ($290 million) for the period. That was down from 286 million pounds a year earlier, when the bottom line was boosted by a 115 million pounds profit from the forced sale of BSkyB's 10.4 percent stake in terrestrial broadcaster ITV.

The company said operating profit, which excludes those one-time effects, was up 5 percent to 261 million pounds while revenue was up 13 percent to 1.65 billion pounds.

BSkyB said it had added a net 51,000 customers in the quarter, taking its total above 10.1 million.

Shares in BSkyB were up 0.1 percent at 835 in midmorning trading on the London Stock Exchange.

The price reflects the market's expectation that News Corp. will have to offer significantly more than its initial indicative offer of 700 pence per share to buy the 61 percent of the shares it doesn't already hold.

In March, British Culture Secretary Jeremy Hunt said he was inclined to approve the deal, following News Corp.'s offer to allay media plurality concerns by spinning off Sky News as an independent company. A final decision is expected soon.

News Corp. faces a further complication in Britain with the widening investigating of illegal phone hacking by reporters at The News of the World, the company's mass-market Sunday tabloid.

Two men employed by the tabloid served jail sentences, and police made two more arrests earlier this month.

Andy Coulson, former editor of News of the World, resigned as Prime Minister David Cameron's chief spokesman in February because of continuing questions about his role in the hacking. Coulson insists he had no idea what was going on at the paper.

Steve Liechti, analyst at Investec Securities, believes the News of the World scandal is not an issue in the takeover bid and that News Corp. will get the green light from Hunt .

"Reading his recent interviews, it looks a foregone conclusion that there will be no plurality-based referral and the current phone tapping scandal can have no effect on his decision as it is purely based on media plurality," said Liechti.

Critics of the News Corp. bid for BSkyB note that the company already owns News of the World, The Times, The Sunday Times and the country's biggest-selling newspaper, The Sun.