Sky profit tops $1.8bn

UK pay-TV operator BSkyB has posted a record £1.19bn (US$1.84bn) pre-tax profit for the year, while investing millions in low-cost set-top box creator Roku and its own new on-demand service.

Profit increased 17% year-on-year while revenue rose 4.5% to £6.8bn, according to figures for the 12 months to June 30, 2012. The firm will also return £500m to shareholders through an ongoing share buyback scheme, and operating costs fell 6% to £2.6bn.

In related news, Sky is among several companies, including its biggest shareholder News Corp, that have invested a total of US$45m in Roku in its latest funding round. This follows confirmation that new on-demand service Now TV would launch on the platform.

The Roku deal gives Sky, which invested US$10m, the option to rebrand and distribute versions of Roku streaming devices in the future. This gives Sky leverage to launch in the US and take on streaming content market leader Netflix should it wish to do so.

Furthermore, Sky revealed it would invest £30m in Now TV, which is launching on UK telco TalkTalk’s version of hybrid web TV service YouView, it was announced today. The cash will make it tough competition for existing UK over-the-top services Netflix and LoveFilm.

Some analysts see Now TV as an answer to slowing pay-TV subscription take-up, with just 20,000 new customers signing in the three months to June 30.

Now’s launch represents the first time Sky has moved away from the packaged pay-TV model and into a la carte distribution. Its pay-TV subs stand at 10.2 million, while its overall customer base is 10.6 million.

Sky’s CEO Jeremy Darroch said the firm faced a “tough economic climate” but had “delivered record financial results after another year of strong operational growth.

“Looking ahead, we will continue to deploy capital consistently to achieve our goals. We will invest sensibly in areas where customers see value – in getting better on screen and improving our products and services – and maintain a strong focus on operating efficiency and cost control to underpin our investments and deliver increasing returns for shareholders.”