Murdoch Jr. braces Sky nerves

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After an immediate 20% drop in its share price on publication of its quarterly results to the end of June, which wiped more than £2bn off its stock market valuation at a stroke, BSkyB chief executive James Murdoch moved to dispel "misperceptions" about the satellite pay TV broadcaster's future with a confident restatement of its growth strategy.

Although Sky added only 81,000 new homes to its subscriber base during the quarter - a drop of 40% on the same period last year - Murdoch told The Daily Telegraph Sky is sticking to its target of raising subscriber numbers by 35%, from 7.4m to 10m, by 2010. This would require an average increase of 104,166 a quarter, almost 30% faster than the most recent quarterly rise.

The 31-year-old chief executive said the company would continue to move away from its former emphasis on its more costly packages, which had created an image of Sky as the preserve of those with significant amounts of spare cash to spend rather than a standard household utility.

He rejected the idea that Freeview poses a threat to Sky as based on a misconception that people choose between five-channel terrestrial television and multi-channel services, rather than between free and pay-TV. "We don't think it affects the long-term migration from free-to-air to pay," he said. "We're seeing customers who bought Freeview coming to Sky.

"It's the right time to go out and knock some of those misperceptions on the head, and to start really focusing on what are, in many cases, really, emotional barriers to purchase. We think our mid-range packages between £13.50 and £33, including the family pack at £19.50, are mass-market propositions; we think there is room for meaningful price points below £20."