BSkyB reports sharp rise in HD customer figures

BSkyB persuaded a forecast-busting 428,000 people to switch to its high-definition (HD) television service in the first quarter of the year. But the satellite broadcaster now faces tough competition in the race to lure the nation's armchair sports fans ahead of the summer's football World Cup, with rival platforms pushing their HD offerings. Sky reached a compromise with regulators today that will allow its rivals to offer its sports channels at reduced rates in time for the next Premier League season. Both BT and Top Up TV will launch cut-price subscriptions to Sky Sports channels in time for the new football season, making them available on digital terrestrial television for the first time since ITV Digital went bust in 2002. BT is understood to be planning to offer Sky Sports 1 for about £15 a month, while Top Up TV is expected to offer Sky Sports 1 and 2 for about £20 a month. Sky today announced that it had 2.5m HD households by the end of March, more than a quarter of its total customer base, making it by far the largest HD platform in the country. Virgin Media added 77,900 new HD users in the same quarter, taking its HD base to just under a million. But Sky's position is coming under threat. Last month, Virgin Media started offering a new HD box that allows access to its HD channels for the one-off cost of the box – £49. Already customers can pick up ITV1 in HD and the BBC's HD channel for the one-off cost of a Freesat set-top box, but by the time of the World Cup, more than half the UK will be able to receive HD channels through Freeview, which launched its HD service a few weeks ago. Sky has by far the widest range of HD channels, but all of the rival platforms will be carrying World Cup games in HD. All but eight early-stage World Cup matches will be shown on BBC HD and ITV1 HD. Sky, meanwhile, will start broadcasting Sky News HD on election night. The station will be its 40th HD channel and the broadcaster expects to have 50 up and running by the end of the year. It is also introducing more programming based around what it expects to be the next must-have gadget, 3D television. After its experiments last year with events such as a 3D version of the ballet Swan Lake, it is planning to screen some Guinness Premiership rugby games in 3D. Many of the new HD customers that Sky has signed up – and there were about 100,000 more than the City had expected – are existing Sky users. In the first quarter, the broadcaster added only 62,000 new customers, taking its total subscriber base to 9.77m. But persuading more people to take more products pushed average revenue per user – on a 12-month basis – over £500 for the first time ever. Revenues in the quarter were £1.5bn, up from £1.39bn, while pre-tax profits ballooned to £349m, up from £63m, as a result of Sky's sale in February of part of its stake in ITV , as demanded by regulators. Sky fought hard to retain that stake and has been fighting equally hard against Ofcom's ruling last month that it must slash the cost of its Sky Sports channels to rival broadcasters by more than 20%. Sky is appealing against the decision but today it abandoned its court battle to have the ruling set aside while it mounts its appeal. The competition appeal tribunal brokered a deal under which Virgin Media, BT and Top Up TV can all take advantage of the reduced wholesale price for the Sky Sports channels, but must place the difference between the new regulated price and Sky's original wholesale price in an "escrow" account. If Sky wins its case, which is unlikely to be heard until September, the money will be handed over to the satellite broadcaster.