Even in an uncertain economic climate, BSkyB continues to deliver, giving News Corp all the more reason to feel sorry for itself. Julian Clover reports.
There is this running gag in football that whenever the chairman backs the manager he is out within the week. BSkyB today demonstrated the reverse of this when BSkyB CEO Jeremy Darroch gave his backing to under fire chairman James Murdoch.
Less than 12 hours previously Murdoch had been given the support of the eight independent directors that sit on the BSkyB board. There may be questions to answer elsewhere within News Corp, but when it comes to the satellite operation there is little to complain about.
When under the leadership of Darroch and Murdoch the satcaster has produced profits of £1,073 million there can be little by the way of complaint.
Indeed, the investors and analysts that were in attendance at the regular briefing following Sky’s annual results hardly mentioned the problems that refuse to go away at News Corp’s UK newspaper operations.
The analysts who attend the Sky events are probably more sophisticated than most – and I listen in on many calls to their peers where the understanding of the market can be lacking – so their interest is sharply focused.
They care about the numbers, but also how Sky will get there. A perennial question is whether or not Sky would invest in fibre as a part of its broadband strategy, the reply remains the same: only if the customers are asking for it, and they’re not. The customers probably didn’t ask for push VOD either, but the fact that already 800,000 of them are using Sky Anytime+ suggests that they do know what is good for them.
One question relating to the News Corp/News of the World hacking debacle was that of Ofcom’s fit and proper person’s test. Darroch described the idea that Sky wouldn’t pass such a test as laughable, pointing out the innovation and investment Sky had brought to the UK market.
It was another roundabout way of asking what actions Sky would take to ensure that it would pass; or put another way would James Murdoch then fall or be pushed onto his sword?
BSkyB’s results demonstrate the reason as to why News Corp was interested in expanding its 39% holding in the first place – and the company has pledged to maintain its ownership at that level even after the current share buyback scheme – the profitability and management of BSkyB is highly desirable. This is even truer when compared to those of the loss making newspapers and those once in charge.
