BskyB Profit Down; To Buy Sky Italia, 57.4% Stake In Sky Deutschland

(RTTNews) - British Sky Broadcasting Group Plc, known as BskyB, (BSYBY.PK, BSY.L) reported Friday a decline in fiscal 2014 profit mainly on higher charges, despite increased revenues benefited by strong demand. The company also announced higher dividend. Separately, the entertainment and communications provider said it has agreed to acquire 21st Century Fox's (FOXA, FOX) 100 percent stake in Sky Italia and its 57.4 percent interest in Sky Deutschland (SKDTF.PK, SKDTY.PK) in nearly $9.3 billion deal.

In London, BskyB shares were losing 40.50 pence or 4.38 percent, and trading at 884.50 pence.

BskyB's fiscal 2014 pre-tax profit declined to 1.082 billion pounds from last year's 1.257 billion pounds. The latest results included negative adjusted items of 104 million pounds, compared to 7 million pounds last year.

Adjusted pre-tax profit was 1.19 billion pounds, compared to last year's 1.264 billion pounds. Adjusted profit after tax dropped to 937 million pounds from 969 million pounds in the prior year, and adjusted basic earnings per share were 60 pence, flat on the prior year's level.

Revenues, however, increased 5.5 percent to 7.63 billion pounds. Adjusted revenues grew 6.5 percent to 7.61 billion pounds with continued strong growth in both retail and commercial businesses.

Retail subscription revenue grew 7 percent reflecting strong product and customer growth and price rises. Advertising revenues also increased 7 percent.

In the year, the company added 3.1 million new paid-for products, 23 percent more than prior year. As of June 30, total paid-for products were 34.78 million, higher than 31.63 million a year ago.

New connected TV services in Internet-connected Sky+HD boxes surged from last year. Total customers were 15.54 million, a growth of 706 thousand from the prior year.

Further, the company said the 2014 final dividend proposed is 20 pence per ordinary share. This makes full year dividend at 32 pence per share, 7 percent increase from last year.

Chief Executive Jeremy Darroch said, "Looking ahead, we see a broader opportunity for growth than ever before as we bring our core products to more customers, and open up new revenue opportunities.

In its deal with 21st Century Fox, BskyB said the total Sky Italia consideration is 2.45 billion pounds with approximately 2.07 billion pounds to be paid in cash. The balance in the deal will be satisfied through the transfer of BSkyB's 21 percent stake in National Geographic Channel International at a value of 382 million pounds.

The acquisition of 21st Century Fox's stake in Sky Deutschland is for 2.9 billion pounds in cash, valuing Sky Deutschland at 6.75 euros per share.

21st Century Fox said it would receive nearly $9.3 billion in combined value from BskyB, including about $8.6 billion cash and BSkyB's 21 percent interest in National Geographic Channels International, raising 21st Century Fox's stake to 73 percent. Upon completion of the transaction, the net cash proceeds to be received by 21st Century Fox would total about $7.2 billion.

BSkyB will also launch a voluntary cash offer to Sky Deutschland's minority shareholders at 6.75 euros per share.

For BskyB, the deal is expected to be at least neutral to earnings per share in the second full financial year of ownership and strongly enhancing to earnings per share thereafter.

21st Century added that for fiscal 2015, it will continue share buyback program and will announce the details with earnings announcement on August 6.

Sky Deutschland shares are currently at 6.77 euros, up 1.59 percent.