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Sky reports bumper results, says it is 'fit and proper' licence holder

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Sky has reported another set of bumper results, as the pay-TV giant insists that it is "fit and proper" to hold a UK broadcasting licence.

The satellite broadcaster today said that it added 78,000 net new households in the first three months of 2012, bringing its total base to 10.55 million customers.

Sky also claimed to be the largest triple-play service provider - involving customers taking TV, internet and phone from the same company - at 3.2m subscribers, up 24% year-on-year.

In the three months to March 31, Sky welcomed 63,000 new standalone broadband customers, bringing the base to 3.86m, and 15,000 net new TV customers. The number of customers signed up to Sky+ HD is now 4.22m.

However, media regulator Ofcom is currently investigating whether Rupert Murdoch's News Corporation is 'fit and proper' to hold a 39.1% stake in Sky, following revelations of malpractice at its UK newspaper publisher News International.

This week, six members of the Commons culture committee concluded that Murdoch was "not a fit person" to run a major international company, although four others disagreed, leading News Corp to brand their report "partisan".

The media regulator has said that it could revoke Sky's broadcasting licence if it finds more widespread wrongdoing at shareholder News Corp, and confirmed that it will take the Commons committee report into account in the investigation.

Today, Murdoch sent an email to staff at his UK newspapers saying that the findings of the report were "hard to read", but also insisting that the business will be "better and stronger" following the hacking affair.

Alongside its trading statement, Sky tellingly said that it had made a "positive contribution to UK audiences, employment and the broader economy", and also stressed its "strong record of regulatory compliance and high standards of governance".

The company said that it remained a "fit and proper" holder of a broadcasting licence, and said that it was engaging with Ofcom in the investigation.

In a call today with analysts, Sky boss Jeremy Darroch said: "I know many of you will be keen to hear our views on Ofcom's assessment of whether Sky is fit and proper to hold its broadcasting licences.

"This process has been ongoing since last year and, as you would expect, Ofcom are gathering information to help them in their review. There is no timetable but we will stay in close contact with Ofcom as the process continues.

"In the meantime, I would emphasise that it's important to remember that Sky and News Corporation are separate companies. We believe that Sky's track record as a broadcaster is the most important factor in determining our fitness to hold a licence.

"And the evidence shows that Sky serves UK audiences and customers well. For example, we have invested more than £1 billion in independent news provision and we are the fastest-growing source of investment in original British programmes.

"The wider benefits that flow from our business are equally significant. Sky employs around 19,000 people directly and the growth of our business generates a tax contribution of £1 billion every year. We're proud of our contribution, which I think is second to none."

Meanwhile, Sky continues to generate recession-busting results, as the company's operating profit in the nine months to the end of March was £939m, up 25% from the same period last year.

Revenue was £5.08bn over the nine months, up 5% year-on-year, and average revenue per user (ARPU), a key metric for analysts, was £546, up £9 from last year.

The quarter also saw the departure of Sky chairman James Murdoch after criticism of his handling of the phone hacking scandal while in charge of News International. He was replaced by former deputy chair Nicholas Ferguson.

NOW TV
Darroch said that the company had made a "good start" to 2012 in what remains a "tough economic environment".

"The decision to focus our marketing on home communications has paid off with our fastest quarter of growth since launch and confirmation that Sky is now Britain's favourite triple-play provider," he said.

"More households are choosing Sky and taking more products from us because we're constantly looking to improve the quality and value that we offer.

"Already in 2012, we've launched an entirely new channel dedicated to Formula 1, given millions of households access to a huge choice of on demand TV and made our market-leading broadband service even better with the launch of our fibre products and free out-of-home WiFi.

"Looking ahead, we will continue to improve our service for all Sky customers as we believe this is the best way to build a larger business and continue to increase returns for shareholders."

Alongside the results, Sky confirmed that NOW TV, its new online TV service aimed at pulling in pay-TV abstainers, is "on track for launch in first half of calendar 2012, widening the availability of Sky content on broadband-connected devices".

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