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Sky flexes muscles for broadband deathmatch

Media behemoth flashes financial might

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BSkyB has released its annual results, parading its weapons-grade financial clout for the upcoming triple and quadruple play tussle.

Revenues were up 8 per cent to £4.15bn, while pre-tax profits were up 1 per cent to £798m. Operating profit rose 7 per cent to £877m, which was adjusted to £561m, giving earnings of 30.7 pence per share.

The £11m operating loss of Easynet, which comprised revenues of £79m and costs of £90m, was swallowed easily. Sky has so far invested net £12m in its residential broadband roll-out, including £1m in marketing, which can be expected to increase as the battle intensifies.

Sky chief James Murdoch said: "We feel encouraged by the strong demand our customers show for new entertainment and communications services."

Sky will be delivering some sport, movies and Disney content over broadband soon. Its broadband range, launched last week, starts at a "free" 2Mb connection to £10 a month for a £16Mb package, exclusive to Sky TV punters. Those satellite customers in areas lacking Easynet LLU can fork out £17 a month for 8Mb. Bosses see broadband and its fixed line phone service Sky Talk as a way of shoehorning its core pay TV business into homes.

Sky hired 1,500 new call centre staff and 600 home engineers in preparation for demand for its broadband offerings. It spent £37m on LLU over the year. Yesterday Carphone Warehouse conceded it did not prepare well enough for its launch.

Read the full statement from BskyB here (pdf).®

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