BSkyBs Dish Base Falls, Digital Grows

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London -- Despite strong growth for its
"SkyDigital" direct-to-home platform, British Sky Broadcasting Group plc's
total DTH-dish base has dropped slightly over the past year, as the country's cable
operators push ahead in marketing and rolling out their own advanced services.

BSkyB's DTH connections, including analog and digital
subscribers, slipped about 2.3 percent to 3.46 million as of the fiscal year ended June
30, from 3.54 million a year ago.

At a press conference earlier this month disclosing
BSkyB's annual earnings, CEO Tony Ball attributed the decline in the company's
total DTH-dish base to cable's effort to "drive penetration using low-cost entry
packages."

Ball also confirmed that both of BSkyB's interactive
services are now operational.

"Sky Sports Interactive" was set to launch this
past Sunday (Aug. 22), transmitting the Arsenal-Manchester United soccer match. SkyDigital
subscribers were able to choose their own camera angles and view 30-second replays at any
time during the match.

"Open," BSkyB's home shopping service, is
also now active, Ball said, promising more services during September and October.

However, BSkyB's income from cable subscribers grew
overall, as Britain's cable-subscriber base rose about 14 percent over the past year,
to almost 3.2 million. BSkyB's revenue per cable subscriber declined, although the
company didn't say why.

BSkyB posted strong growth in other areas, notably at
SkyDigital. As of July 30, 1.2 million SkyDigital subscriptions had been sold, and by June
30, about 1 million customers had the service installed.

SkyDigital's growth was particularly impressive
because BSkyB had originally forecast that it would take the service one year to reach the
1 million-subscriber mark when it launched last October. Of the 1.2 million SkyDigital
packages sold, about 515,000, or 43 percent, were to new customers, rather than migrating
BSkyB analog subscribers.

At the same time, 98 percent of SkyDigital subscribers are
buying the platform's big basic "Family" package.

SkyDigital also boasts a strong pay-to-basic ratio of 319
percent. The pay-to-basic ratio represents the number of premium channels subscribed to,
divided by the total number of subscribers, and it indicates how willing subscribers are
to pay for more expensive services. Over the past year, Britain's cable operators saw
their pay-to-basic ratio fall to 124 percent from 144 percent.

The strong digital growth hasn't come without a price.
In May, SkyDigital began offering dishes free-of-charge to new customers. That -- and
other costs related to SkyDigital's start-up -- helped to push BSkyB's net debt
upward for the first time in four years, to £665 million ($1.1 billion) from £518
million ($829 million).

The total subscriber base to BSkyB's channels -- which
includes digital and analog DTH, cable distribution and digital-terrestrial distribution
through ONdigital -- rose to 7.4 million homes from 6.9 million over the last fiscal year.

BSkyB's operating revenue rose 8 percent to £1.5
billion ($2.5 billion) from £1.4 billion ($2.3 billion), but DTH-subscription revenues
grew just 1 percent over the year.

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