Murdoch comments raise cost worries over Sky broadband

by Daniel Farey-Jones, Brand Republic 15-Nov-06, 09:00

LONDON - Rupert Murdoch triggered a 2.4% fall in BSkyB's share price after telling analysts the company's foray into broadband would absorb more of its full-year profits than it had expected.

Analysts had forecast that Sky's full-year earnings before interest and tax would be in the range of £770m-£810m, and Sky chief executive and Murdoch's son James had agreed with this figure two weeks ago at the company's first-quarter results.

His father, who is chairman of Sky, lowered that forecast in an informal meeting with analysts in Sydney on Monday this week.

A Deutsche Bank analyst quoted Murdoch senior as saying: "The three-year build-out of broadband and telephony capability at BSkyB would result in earnings before interest and tax falling from £900m to £700m and possibly £650m."

The London Stock Exchange reacted yesterday, with Sky's share price spiralling down 2.4% to 537p.

Sky itself is now suggesting a range of £730m to £820m, with a spokesman saying it is "happy with current market expectations".

After launching Sky Broadband in July, by the end of October the company had connected 74,000 customers and had a total of 1m people register their interest in the service.

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