BSkyB broadens its horizons

The deal, still subject to regulatory approval, would widen BSkyB's customer base by three-quarters to 20m and bring its total annual sales to about £11.2bn, making it the largest pay-TV provider in three of Europe's four largest markets. But that title could cost it up to £7bn, if its offer of €6.75 (£5.34) a share for Fox's 57.4 per cent stake in Sky Deutschland is also taken up by the latter's minority shareholders.

It seems BSkyB's surprise sale of its 6.4 per cent stake in ITV last week was driven by its need for cash. It also raised £1.36bn through a share placing at 870p on the day of the announcement, and is transferring its 21 per cent stake in National Geographic, valued at £382m, to Fox. BSkyB expects combining with its two namesakes in continental Europe to strongly enhance EPS and drive £200m in cash synergies from 2017 onwards.

The distraction of dealmaking didn't stop BSkyB from adding 342,000 retail customers - the highest number in three years - and increasing its sales from continuing operations by 7 per cent to £7.6bn. It also doubled the number of households it provides with internet-connected TV services to 5.7m, and raised its average revenue per user by £7 to £576.

Those gains were largely driven by prudent content selection. Season Four of HBO's Game of Thrones was Sky Atlantic's highest-rated show in history, and a closely-fought Premier League helped Sky Sports' share of audiences soar to a seven-year high. However, hefty investments in connected TV and rising Premier League broadcasting costs caused BSkyB's adjusted operating profit to slump 5 per cent to £1.26bn.

For the current financial year, broker Numis Securities expects pre-tax profits of £1.27bn, giving EPS of 65.2p, rising to £1.34bn and 69.8p in 2015-16.