BSkyB Share Buy-back

BSkyB are planning to buy-back £750 million of their own shares to help protect themselves from a hostile takeover bid. The move will also make it clear to shareholders that they do not plan to be taken over any time soon.

BSkyB has reported good financial results this year with an increase in revenues of 16% to a total of £6.6 billion. Their cash flow has also increased considerably with £869 million sitting in the bank. So a share buy back is the most sensible course of action in the current circumstances.

Some investors actually wanted to see BSkyB claw back more of their shares though, but SSkyB’s CEO said that they wanted to keep a healthy cash flow for any future investments.

At the moment the big news at Sky is the partnership with the BBC to share some of the F1 Grand Prix coverage. The partnership is running from 2012 to 2018 and it will see half of all the grand prix’s aired on the BBC. Sky will be showing them all on its own Sports channels.

HD (high definition) is boosting Sky’s coffers, with many people paying out an additional £10 each month for the right to view HD TV. With 10.3 million customers this alone has the potential to add £1.2 billion to its annual revenue. Currently there are around 3.87 million Sky+HD customers who are paying a premium fo the right to record Sky and watch in HD. However, overall there has actually been a small drop in average revenues per customer of around £5.

With the growing interest in FreeSat, which offers free HD television and free recording, pausing of live TV and series linking (i.e. everything which Sky offers) plus access to BBC iPlayer via the set top boxes, it is a surprise that Sky continues to grow its customer base.

Also on the horizon is the long awaited Google TV which will revolutionise the way we watch television. At the moment the battle is between  satellite and cable services, but soon superfast broadband will be streaming films first to screens in high definition. If you are planning to invest in Sky in the long term then it is important to consider the new technologies and services which are growing rapidly.

Good news for shareholders this year though as the board agreed to raise the dividend by 20% to 23.2 pence.

 

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