BSkyB in '£127m share buy-back'

net1

Britain's dominant pay-TV operator BSkyB has reportedly bought back 22.8m shares in the company for £127m. According to the Financial Times, the buy-back represents just over 1% of the total shares in issue.

BSkyB has shareholder approval to buy up to 5% of its shares, a move that is controversial with some investors who view it as an opportunity for Rupert Murdoch's News Corporation to lift its shareholding from 35% to 37%.

The FT said the buy-back is now on hold as BSkyB prepares to unveil its half-year results on February 2. Those results will include the crucial Christmas quarter. Chief executive James Murdoch will be hoping that a high-profile marketing campaign will have substantially boosted new subscriber gains. Murdoch is targeting a total of 8m subscribers by the end of the year, up from 7.4m at the end of the last quarter.

Analysts have offered widely different estimates on likely net quarterly additions, ranging from 104,000 to 200,000, with a consensus of around 140,000.

The FT's Lex column said while weekend press reports suggested net additions in the three months to the end of December might reach 170,000, "competition from alternative services" is increasing, with reports that Freeview sold 1.3m boxes in the period.

"Admittedly, Sky itself is only targeting a figure above 100,000," said Lex. "But, after launching its biggest advertising campaign in six years, Sky needs a bumper Christmas quarter to sustain expectations that it can meet its target of 8m subscribers by end 2005."