SOURCE: British Sky Broadcasting Group PLC

January 27, 2011 02:39 ET

British Sky Broadcasting Group Six Months Results

Middlesex, UK--(Marketwire - January 27, 2011) -




                 BRITISH SKY BROADCASTING GROUP PLC
     Unaudited results for the six months ended 31 December 2010

             STRONG FIRST HALF RESULTS; STRATEGY DELIVERING

                        Adjusted results             Reported results
Six months to       2010       2009   Variance   2010       2009   Variance
31 December

Revenue           GBP3,186m  GBP2,773m   15%   GBP3,186m  GBP2,773m   15%
Operating profit    GBP520m    GBP414m   26%     GBP491m    GBP414m   19%
EBITDA              GBP677m    GBP568m   19%     GBP648m    GBP568m   14%
Earnings per share    20.0p      15.2p   32%       20.3p      15.4p   32%
(basic)
Dividend per share    8.74p     7.875p   11%       8.74p     7.875p   11%

All comparatives are restated to reflect continuing operations

Record Q2 product growth

* Total net product growth of 1.204 million

   - Surpassed 10 million customer milestone with 140,000 net additions

   - Net additional Q2 product growth up 7% to 1.064 million

* HD reaches 3.5 million customers, up 68% year on year

* Fastest broadband growth in 10 quarters with 204,000 net additions

* 24% of customers now taking all three of TV, broadband and
  telephony


Bringing outstanding content, more innovation and greater value to Sky
customers

* Sky Atlantic, a brand new entertainment channel, to launch on 1
  February for Sky TV customers at no extra cost

* Sky Anywhere to allow easy access to Sky content on multiple
  devices, supported by acquisition of leading public Wi-Fi
  operator 'The Cloud'

* Improving customer service with the opening of new contact centres
  across the UK, creating 1,500 jobs at Sky


Excellent financial performance; strong growth in revenue, profit and
cash flow

* Revenue up 15% to GBP3.2 billion with broadly-based growth

* Adjusted operating profit up 26% to GBP520 million; operating margin
  expansion of 140 basis points to 16.3%

* Adjusted basic EPS up 32% to 20.0 pence

* Adjusted free cash flow up 44% to GBP443 million

* Interim dividend up 11% to 8.74 pence


Results highlights

Customer Metrics (unaudited)
                      Quarterly Net       First Half Net       Closing
                         Additions           Additions           Base
'000s             31-Dec-10  31-Dec-09  31-Dec-10  31-Dec-09  31-Dec-10
 Net Customer
 Additions              140        172        236        266     10,096
Additional products
 Sky+HD                 343        482        558        769      3,497
 Multiroom               61        102         98        164      2,219
 Broadband              204        101        382        201      3,006
  Telephony             187        130        390        262      2,757
  Line rental           269        178        529        387      2,215
Total Additional
Product Growth        1,064        993      1,957      1,783     13,694
Total Net Product
Growth                1,204      1,165      2,193      2,049     23,790

Other Metrics
 Gross Customer
 Additions (000)        378        402        752        764
 ARPU (quarterly
 annualised)         GBP541     GBP492
 Churn (quarterly
 annualised)           9.5%       9.6%


Business Performance (unaudited) (1)
GBP'millions                   6 months to     6 months to           %
                                    Dec-10          Dec-09    movement
Revenue                              3,186           2,773         15%
Adjusted operating profit              520             414         26%
% Adjusted Operating Profit          16.3%           14.9%
Margin
Adjusted EBITDA                        677             568         19%
Adjusted free cash flow                443             308         44%
Adjusted basic earnings per          20.0p           15.2p         32%
share(2)
Net debt as at end of period           945           1,679        -44%


Reported Results (unaudited) (1)
GBP'millions                   6 months to     6 months to           %
                                    Dec-10          Dec-09    movement
Revenue                              3,186           2,773         15%
Operating profit                       491             414         19%
Cash generated from                    799             687         16%
operations
Basic earnings per share             20.3p           15.4p         32%


(1) All comparatives are restated to reflect continuing operations,
    excluding the Easynet operations divested on 1 September 2010. A
    reconciliation of adjusted operating profit and adjusted EBITDA from
    continuing operations to reported measures and cash generated from
    continuing operations to adjusted free cash flow from continuing
    operations is set out in Appendix 4.

(2) Adjusted basic EPS is calculated from adjusted profit from
    continuing operations for the period. A reconciliation of reported
    profit to adjusted profit from continuing operations is set out in
    note 5 to the condensed consolidated interim financial statements.

Jeremy Darroch, Chief Executive, commented:

"The business has delivered a half year of outstanding performance,
with record product sales and strong double-digit growth in revenue,
profit and cash flow. In recognition of the growing strength of the
business, we are increasing the interim dividend by a further 11%, the
seventh consecutive year of growth.

"In the second quarter, we saw strong demand across the board, passing
our target of 10 million customers and adding more than one million
additional subscription products for the first time. In particular,
high definition continued to grow strongly and we achieved our highest
broadband growth for more than two years. Overall, almost one in four
customers now choose to take all three of TV, broadband and telephony
from us, which is contributing to further strong ARPU growth and good
levels of customer loyalty.

"Looking ahead, we are cautious on the economic outlook for 2011, while
remaining very confident in the long term opportunity for the business.
We intend to maintain our consistent strategy of pursuing both growth
and returns, by balancing sensible investment with a strong emphasis on
operational efficiency.

"In this context, we will focus on giving even more value and better
service to customers in 2011. Next week, customers can look forward to
the launch of Sky Atlantic, a premium channel featuring outstanding
entertainment from the US and the UK, available to Sky TV customers at
no additional charge. Later in the year, we will launch a new service,
Sky Anywhere, to make it easier for customers to enjoy our programmes
wherever they are. And we will open a new facility in Sheffield as the
next step in a programme to expand our network of contact centres,
which will deliver an improved experience for customers and result in
around 1,500 new Sky jobs around the UK."

OVERVIEW

The business has continued to perform well in the first six months of
the 2011 fiscal year ("the period"), achieving our milestone of 10
million customers and delivering strong take-up of additional products.
Total net product growth was 2.193 million, of which 1.204 million came
in the three months to 31 December 2010 ("the quarter"). Within this,
there was a particularly strong performance in high definition ("HD")
and home communications. Almost 3.5 million customers now choose to
subscribe to HD and we have exceeded three million Sky Broadband
customers after achieving our highest growth for 10 quarters. In total,
24% of customers now take all three of TV, broadband and telephony, up
by six percentage points on the prior year.

The strong operational performance is reflected in our financial
results, which show double-digit growth in revenue, operating profit
and cash flow. Group revenue for the period was 15% higher, with
continued strong growth in retail subscription, wholesale and
advertising revenues. Combined with our continued focus on operational
efficiency, this delivered a 26% increase in adjusted operating profit,
140 basis points of margin improvement and a 32% increase in adjusted
basic earnings per share.

The Directors are proposing an interim dividend of 8.74 pence per
share. This represents an increase of 11% year on year and makes this
the seventh consecutive year of increased dividends for shareholders.
On the basis of the strong performance of the business, we expect to
maintain good rates of dividend growth at the current payout ratio of
around 50% of adjusted earnings.

OUTLOOK

Having achieved our 10 million customer milestone, we continue to see
significant potential for long-term growth in the entertainment and
communications marketplace. We expect that our growth will benefit from
being more broadly based in the future, through the combination of
continued take-up of pay TV, increasing penetration of premium TV
products, growth in our share of home communications and in our other
revenue lines.

Our approach will be to balance our ongoing focus on operational
efficiency with continued, sensible investment in areas that customers
value and in the long-term capabilities of the business. We believe
this approach will deliver sustainable growth in revenue, profit and
cash flow, thereby maximising value for shareholders.

In the short-term, we take a cautious view of the economic outlook for
calendar 2011, as the impact of the Government's deficit reduction plan
flows through to the consumer economy. In this context, we will stay
flexible on costs while focusing on the customer, with more
high-quality content, leading innovation and better service.

OPERATIONAL REVIEW

Operational Performance

We saw continued success in our multiproduct strategy in the quarter.
Total net product growth was 1.204 million, with strong demand from
both new and existing customers. Within this, net DTH additions for the
quarter were 140,000, taking total customers to 10.096 million, with
gross additions of 378,000 and slightly lower churn year on year at
9.5%.

We saw good growth in subscription product penetration across the
board, with particularly strong performances in HD and home
communications. HD net additions of 343,000 took the base to 3.497
million households. Since taking our decision to lower the upfront cost
of the HD box two years ago, we have added a total of 2.718 million
customers to our HD service.

During the quarter we further enhanced our channel line-up, bringing
the HD versions of ITV2, ITV3, and ITV4 exclusively to pay TV. With 54
channels and growing, we maintain a strong leadership position in HD
and are well positioned for future growth with the broadest HD content
offering at great value.

In home communications we delivered another stand-out performance, with
a new record total for combined broadband, telephony and line rental
additions in the quarter of 660,000, 61% higher than the prior year.
Broadband net additions of 204,000 were the highest for 10 quarters and
continued strong growth in line rental customers took the total to 2.2
million, representing 22% penetration and an increase of nine
percentage points on the prior year. In addition, we now have over 1.2
million customers on our unbundled network.

Today, 2.4 million customers take all of TV, broadband and telephony,
38% higher than the prior year, and there remains a significant
opportunity for continued growth. As customers continue to respond to
our great value products and reward us with more of their business,
ARPU reached a new high of GBP541 per annum, which this quarter
included GBP3 from the Haye vs Harrison pay per view event.

This second quarter performance completed a strong first half. Total
net product growth of 2.193 million in the period means we have a total
of 23.79 million products, 21% higher than the prior year. Within this,
we saw continued net customer growth in the period of 236,000 (2010:
266,000) and a strong performance in both home communications and HD.

Content

We have made good progress in content, where we are building on our
traditional strengths in sports, news and movies to extend our
entertainment offering further.

On 1 February 2011, our new channel, Sky Atlantic, will launch for Sky
TV customers. The channel will showcase must-see content from HBO,
including the critically acclaimed 'Boardwalk Empire' and highly
anticipated 'Game of Thrones'. The channel will also become the home of
the award winning 'Mad Men' in 2011, as well as other distinctive
programming from the US and the UK including an original comedy 'This
Is Jinsy' and Paul Abbott's new drama, 'Hit and Miss'. The Sky Atlantic
linear channel will be supplemented with an extensive on-demand
offering, including catch-up TV and on-demand access to series' box
sets. This premium content will be available at no extra charge to Sky
TV customers as part of our basic channel line-up.

The integration of Living TV Group ("Living TV") is progressing well.
The acquired channels complement our existing entertainment channel
line-up with popular brands, high profile talent and talked-about
programmes, generating strong appeal for our female viewers. Looking
ahead, Living, which will be rebranded to Sky Living from 1 February,
has a strong schedule with the return of popular series such as 'Grey's
Anatomy' and 'America's Next Top Model.' As part of the integration of
Living TV, we are allocating a greater proportion of our programming
spend to the channel, investing in new content including the channel's
first ever commissioned British drama, 'Bedlam', starring Will Young.

Sky1 continued its track record of bringing customers 'cut-through'
programming. This quarter we screened more original British comedy with
the conclusion of 'An Idiot Abroad', one of the most successful
programmes in the channel's history, and 'Little Crackers,' a series of
one-off comedy films featuring well known talent such as Catherine
Tate, Stephen Fry, and Victoria Wood. In the coming months, Sky1 will
continue its commitment to British drama, with original commissions of 'Mad
Dogs' and Martina Cole's 'The Runaway.'

In sports, the Premier League season has continued strongly as
customers enjoy more live games on Sky. Monday Night Football is
proving popular, with the Manchester United vs Arsenal match on 13
December achieving a record audience for Monday Night Football of over
three million viewers. We also achieved record ratings for England's
autumn rugby internationals and excellent audiences for England's
success in the Ashes series. Sky Movies had a strong quarter with six
premieres each attracting audiences of more than one million in the
first week of broadcast. Over Christmas, the world TV premiere of 'Avatar'
aired in HD and 3D, achieving a cumulative audience of three
million in the first week.

Innovation

We continue to innovate to add value for customers. In October, we
launched Europe's first dedicated in-home 3D TV channel, bringing live
3D sport, movies and entertainment to top-tier HD customers at no extra
cost. In addition to the regular Premier League games broadcast in 3D,
this quarter we screened the Ryder Cup, Scottish international
football, England's rugby internationals, world heavyweight boxing and
world championship darts in 3D. We have screened a wide range of 3D
movies including 'Alice in Wonderland', 'Monsters vs Aliens', 'Ice Age:
Dawn of the Dinosaurs' and the world TV premiere of 'Avatar.' Over the
Christmas period, we premiered our first piece of commissioned 3D
content, 'Flying Monsters,' a natural history documentary written and
presented by Sir David Attenborough.

Our full video-on-demand product, Sky Anytime+, launched in October and
is a good example of the way in which we are utilising the broadband
connectivity of the HD box to enhance the Sky+ experience. Customers
with an HD box and our top broadband package can access a substantial
library of on-demand entertainment at no extra charge, and Sky Movies
customers also have on-demand access to our constantly updating movies
library as part of their regular subscription.

We continue to take advantage of the growing opportunity to broaden
distribution of our content beyond the DTH platform. Sky Mobile TV is
now available on a number of devices, including the iPad and iPhone,
and we are the leading media provider on mobile and tablet platforms in
the UK with almost eleven million applications downloaded to date.

In anticipation of continued growth in sales of mobile data devices and
increasing demand for flexible access to content, we will launch Sky
Anywhere later this year, a new service allowing Sky TV customers to
enjoy our programmes wherever they choose. Sky Anywhere will combine
access to the existing Sky Player and Sky Mobile TV services to make it
easy for customers and their families to access our content on multiple
devices both inside and outside the home.

To support our mobile content activities, today we are announcing the
acquisition of the leading public Wi-Fi operator, 'The Cloud'. The
acquisition gives us ownership of over 5,000 public Wi-Fi locations
across the UK, ensuring that customers can access our online service at
a network of convenient locations. In addition, the initiative will
complement our existing broadband services by offering customers a
comprehensive option for Wi-Fi connectivity while they are on the move.
For further detail, please refer to the 'Corporate' section below.

The Bigger Picture

As part of our commitment to making a positive contribution to the
community, we delivered a number of initiatives in the quarter through
our Bigger Picture programme.

To help combat climate change, we broadcast a week of
environment-themed programming in November, including 'The Family Show
Goes Green', showcasing the Sky Rainforest Rescue Schools Challenge on
Sky Movies. In recognition of our efforts to reduce emissions from
travel, we received WWF's '1 in 5' award for reducing air travel by 38%
over the last 3 years. We were also awarded 'Sustainable Project of the
Year' at the UK Green Building Council's Sustainability Awards 2010 for
our new broadcasting facility.

In acknowledgment of our volunteering initiatives and the difference
these make to the local community, we were awarded the 'Corporate
Responsibility Award of the Year' by the HR Network Scotland. In our
Scottish operations alone, more than 1,900 Sky people have volunteered
through the scheme since March.

In October we launched Sky Talker, a new device that makes it easier
for blind and partially-sighted customers to use the Sky Guide, our
Electronic Programme Guide ("EPG"). Developed in partnership with the
Royal National Institute of Blind People, Sky Talker will, for the
first time, allow customers to hear some of the programme information
and navigation functions contained within the EPG on our Sky+ box and
Sky digiboxes.

FINANCIAL SUMMARY

Results for the six months to 31 December 2010 ('the period') reflect
an excellent financial performance, with double digit growth in each of
revenue, operating profit, cash flow and earnings. Group revenue was
15% higher than the prior year, the result of continued customer growth
and increased penetration of additional products. Alongside this
revenue growth, our focus on operational efficiency delivered an
adjusted operating margin of 16.3% and a 26% increase in adjusted
operating profit to GBP520 million. With higher income from joint
ventures and associates and lower interest charges, this translated
into adjusted basic earnings per share of 20.0 pence, 32% higher year
on year.

The results for the period include the acquisition of Living TV, which
completed on 12 July 2010. In the period, Living TV contributed GBP60
million in revenue (of which GBP45 million is advertising; GBP14 million
is wholesale; and GBP1 million is other revenue) and GBP49 million of
costs (of which GBP33 million is programming; GBP3 million is
marketing; GBP10 million is transmission, technology and fixed
networks; and GBP3 million is administration). In relation to Living
TV, we incurred exceptional restructuring costs of GBP22 million
principally relating to redundancy payments and the early termination
of a pre-acquisition contract. These restructuring costs are included
within reported operating profit of GBP491 million and excluded from
adjusted figures.

Unless otherwise stated, all figures and growth rates exclude
exceptional items and are from continuing operations (including Living
TV in the current year and excluding Easynet from both the current year
and the prior year comparative).

Revenue

Group revenue for the period increased by 15% on the prior year to
GBP3,186 million (2010: GBP2,773 million) benefiting from strong growth
in retail subscription, wholesale and advertising.

Retail subscription revenue increased to GBP2,631 million
(2010: GBP2,294 million), up 15% year on year. The growth reflects
strong total net product sales of 2.2 million in the period, as we
continued to add new customers and sell more products. Our success in
selling more products contributed to a 10% year on year increase in
ARPU to GBP541, which this quarter included GBP3 from the Haye vs
Harrison pay per view event.

Wholesale subscription revenue increased by 31% to GBP151 million
(2010: GBP115 million) reflecting a higher number of wholesale
subscribers to our premium channels, the first-time inclusion of
wholesale revenues relating to Living TV and the carriage of HD on
another platform for the first time. Excluding Living TV, wholesale
revenue increased by 19%.

Advertising revenue of GBP236 million (2010: GBP168 million) was 40%
higher, benefiting from our increased share of the TV advertising
sector and the consolidation of Living TV. During the period, we
estimate our share of TV advertising increased by nearly three
percentage points year on year, to 17.4%. We continue to outperform the
overall sector, which we estimate increased by 13% year on year,
reflecting our increased share and continued growth in pay TV
customers. Advertising revenue now includes revenue related to our
online properties and Sky Magazine; of which GBP11 million was
reclassified from 'other revenue' in the period and GBP11 million in
the prior year comparative. Excluding Living TV, advertising revenue
was 14% higher at GBP191 million.

Installation, hardware and service revenue was GBP63 million (2010:
GBP99 million), reflecting our decision to lower the retail price of HD
boxes in January 2010.

Other revenue increased by 8% to GBP105 million (2010: GBP97 million),
benefiting from a continued strong performance in Sky Bet and the
integration of Living TV. Excluding Living TV, other revenue was 7%
higher.

Direct Costs

We continue to invest in high-quality content, creating more reasons
for new customers to join Sky, as well as adding more value for
existing customers. As a result, programming costs increased by 15% to
GBP1,058 million (2010: GBP920 million) in line with revenue growth.
Around half of the year on year increase is due to the acquisition of
new sports rights, including the addition of the fifth Premier League
pack, bringing customers 25% more games. Increased sports costs also
reflected the biennial nature of the Ryder Cup and the inclusion of the
Ashes. The remainder of the increase reflects our investment in
entertainment, bringing more quality content to Sky1 with shows such as
'An Idiot Abroad' and 'Thorne', as well as the acquisition of Living
TV. Movie costs were lower year on year, benefiting from improved terms
on contract renewals. Third party channel costs were slightly higher,
reflecting an increased number of HD channels on the platform.

Direct network costs were GBP269 million (2010: GBP207 million), 30%
higher, directly related to strong growth in customers which led to 41%
revenue growth in broadband and telephony.

Other Operating Costs

Marketing costs increased by GBP75 million to GBP613 million (2010:
GBP538 million), reflecting acquisition-related expense associated with
record net product sales and a greater proportion of new customers
joining directly with the HD box. Above the line spend was also higher
year on year, reflecting our campaign in home communications and the
successful Sky Sports marketing campaign as well as the one-time launch
costs of 3D.

The cost to acquire a new subscriber ("SAC") increased by GBP34, to
GBP354. The increase reflects our success in increasing the proportion
of new customers joining directly on our HD service and is consistent
with the plans we set out when moving to our standardised HD box
strategy.

Subscriber management and supply chain costs were GBP35 million lower,
at GBP286 million, reflecting good progress in our operational
efficiency programmes. In supply chain, we are benefiting from lower
box costs and more reliable boxes, as we increase the proportion of
set-top boxes sourced in-house. The cost reduction also reflects a
lower number of engineer visits, as an increased proportion of jobs are
completed right first time and more upgrading customers chose our self-
install option.

Transmission, technology and fixed network costs increased by 27% to
GBP189 million (2010: GBP149 million). Living TV contributed GBP10
million of the increase. In addition, we incurred higher net
transponder costs, as more capacity is used for our own HD channels as
well as the inclusion of costs for network services previously
accounted for within the Group by Easynet.

Administration costs, excluding exceptional items, were GBP251 million
(2010: GBP224 million) reflecting the consolidation of Living TV and
the increase in the Group's non-cash IFRS 2 'Share-based payment'
charge and associated National Insurance costs. The phasing of the
Group's share-based compensation schemes and the increase in the share
price when compared to the prior year contributed to a GBP20 million
increase in the period, despite the volumes of awards made remaining
broadly constant. Excluding this amount and the integration of Living
TV, administration costs were broadly flat. The IFRS 2 charge and
related National Insurance costs for the year are expected to be around
GBP80 million, an increase of GBP35 million.

Earnings

On an adjusted basis, profit before tax from continuing operations was
GBP477 million (2010: GBP364 million) including the Group's share of
joint ventures and associates' profits of GBP17 million (2010: GBP14
million) and a net interest charge of GBP60 million (2010: GBP64
million).

Taxation excluding exceptional items was GBP129 million (2010: GBP99
million). We expect the adjusted tax charge on continuing operations to
be approximately 27% for the full year (2010: 27%). The effective rate
is largely unchanged with the reduction in the UK statutory rate, from
28% to 27% in April 2011, having only a modest positive impact on the
full year rate.

Adjusted profit for the period was GBP348 million (2010: GBP265
million), generating an adjusted basic earnings per share from
continuing operations of 20.0 pence (2010: 15.2 pence). Please refer to
the 'Exceptional Items' paragraph for more detail.

Reported profit before tax for the period from continuing operations of
GBP467 million (2010: GBP371 million) includes the Group's share of
joint ventures and associates' profits of GBP17 million (2010: GBP14
million) and a net interest charge of GBP41 million (2010: GBP57
million). Reported taxation was GBP113 million (2010: GBP102 million)
resulting in profit for the period from continuing operations of GBP354
million (2010: GBP269 million) and basic earnings per share of 20.3
pence (2010: 15.4 pence).

Reported profit for the period including discontinued operations was
GBP407 million (2010: GBP256 million) resulting in reported basic
earnings per share of 23.3 pence (2010: 14.7 pence).

Over the entire period the weighted average number of shares excluding
those held by the Employee Share Ownership Plan for the settlement of
employee share awards was 1,744 million.

Cash Flow and Financial Position

Reported cash generated from continuing operations was 16% higher at
GBP799 million (2010: GBP687 million), reflecting higher EBITDA and
broadly level working capital.

Capital expenditure was GBP221 million (2010: GBP198 million) - 6.9% of
revenue - and broadly in line with our expectations of sustainable
capex around 6.5% of revenue in the medium term. We continued with the
technical fit-out of our new broadcast facility in the period and
expanded our broadband network by a further 141 exchanges.

Adjusted free cash flow was 44% higher at GBP443 million. See Appendix
4 for details of adjusting items. Net cash inflow from continuing
operations was GBP79 million (2010: outflow of GBP299 million) and
included the acquisition of Living TV.

Strong cash flow generation during the period contributed to a
reduction in net debt to GBP945 million, for a reconciliation of net
debt see Appendix 4. The Group's liquidity and headroom remain
comfortable with no bond redemptions falling due until October 2015 and
the Group's revolving credit facility of GBP750 million remaining
undrawn.

Exceptional Items

Reported operating profit of GBP491 million included GBP22 million of
restructuring costs arising on the acquisition of Living TV, which
comprise principally redundancy payments and costs related to the early
termination of an existing contract. Costs of GBP7 million relating to
the News Corporation proposal were also incurred in the period; both of
these amounts were classified as administration costs.

Reported profit after tax also included a GBP34 million exceptional gain
(2010: GBP7 million gain), of which GBP19 million were mark to market
gains relating to derivative financial instruments not qualifying for
hedge accounting and gains and losses arising from designated fair value
hedge accounting relationships, and a GBP15 million non-cash tax credit
for a tax settlement relating to the network operations retained from
the Easynet business. Related tax effects on exceptional items is a
GBP1 million gain (2010: GBP3 million loss).

Distribution to Shareholders

The Directors are proposing an interim dividend of 8.74 pence per
share. This represents an increase of 11% year on year and makes this
the seventh consecutive year of increased dividend for shareholders.

The ex-dividend date will be 30 March 2011 and the dividend will be
paid on 21 April 2011 to shareholders of record on 1 April 2011.

The final dividend in respect of 2009/10 financial year was paid to
shareholders during the period, resulting in a total cash dividend
payment in respect of the 2009/10 financial year of GBP339 million.

Corporate

News Corporation Proposal

On 21 December 2010, the European Commission announced its decision to
approve the News Corporation proposal to acquire the shares it does not
already own in BSkyB without a further Phase Two review.

Separately, after receiving a report from Ofcom, the Secretary of State
intends to refer the proposal to the Competition Commission for a
further review of whether the proposal raises public interest
considerations in respect of media plurality. However, prior to making
a final decision, the Secretary of State will consider undertakings in
lieu offered by News Corporation to address the concerns raised by
Ofcom's report.

BSkyB will continue to co-operate with the ongoing regulatory process.

The Cloud

On 11 January 2011, the Group reached an agreement to acquire The Cloud
Networks Limited ("The Cloud"), a public Wi-Fi network operator.
Completion of the transaction is subject to regulatory clearance in
Jersey. The Cloud had gross assets of GBP17.1 million as at 31 December
2009, its most recent audited group financial statements.

Risks and uncertainties

The Board continually assesses and monitors the key risks of the
business. The following key risks that could affect the Group's
long-term performance, and the factors which mitigate these risks, are
set out in more detail on pages 23 - 26 of the 2010 Annual Report.
Other than where indicated below, the Board does not consider that the
following principal risks and uncertainties have changed. Additional
risks and uncertainties of which we are not aware or which we currently
believe are immaterial may also adversely affect our business,
financial condition, prospects, liquidity or results of operations.

* The Group's business is highly regulated and changes in
  regulations, changes in interpretation of existing regulations or
  failure to obtain required regulatory approvals or licences could
  adversely affect the Group's ability to operate or compete
  effectively. Since the 2010 Annual Report, Ofcom announced its
  decision to refer the supply and acquisition of certain pay-TV movie
  rights and the supply and acquisition of pay-TV packages including
  certain movie channels to the Competition Commission ("CC") for
  investigation. The CC's provisional findings are due to be published
  in April. The Group is not yet able to assess whether, or the extent
  to which this review will have a material effect on the Group.

* The Group operates in a highly competitive environment that is
  subject to rapid change and it must continue to invest and adapt to
  remain competitive.

* The Group's business is reliant on technology which is subject
  to the risk of failure, change and development.

* The Group is reliant on encryption and other technologies to
  restrict unauthorised access to its services.

* Failure of key suppliers could affect the Group's ability to
  operate its business.

* The Group undertakes significant capital expenditure projects,
  including technology and property projects.

* The Group, in common with other service providers that include
  third party services which the Group retails, relies on intellectual
  property and proprietary rights, including in respect of programming
  content, which may not be adequately protected under current laws or
  which may be subject to unauthorised use.

* The Group generates wholesale revenue principally from one
  customer.

* The Group is subject to a number of medium and long-term
  obligations.

Responsibility statement

The directors confirm that to the best of their knowledge:

* The unaudited condensed consolidated interim financial
  statements have been prepared in accordance with IAS 34 as adopted by
  the EU.

* The interim management report includes a fair review of the
  information required by DTR 4.2.7R and DTR 4.2.8R of the Disclosure
  and Transparency Rules.

The directors of British Sky Broadcasting Group plc are listed on pages
34 - 35 of the 2010 Annual Report.

Copies of this report are available on the Company's website,
www.sky.com/corporate, and in hard copy from the Company Secretary,
British Sky Broadcasting Group plc, Grant Way, Isleworth, Middlesex TW7
5QD.

By order of the Board
Jeremy Darroch
Chief Executive Officer

Enquiries:

Analysts/Investors:

Lang Messer  Tel: 020 7800 2657
Chris Wiles  Tel: 020 7800 2654

E-mail: investor-relations@bskyb.com

Press:

Robert Fraser    Tel: 020 7705 3000
Bella Vuillermoz Tel: 020 7705 3000

E-mail: corporate.communications@bskyb.com

Click on, or paste the following link into your web browser, to view
the associated PDF document.

http://www.rns-pdf.londonstockexchange.com/rns/1591A_1-2011-1-27.pdf


There will be a presentation to analysts and investors at 09:30 a.m.
(GMT) today. Participants must register by contacting Emily Dimmock or
Yasmin Charabati on +44 20 7251 3801 or at bskyb@finsbury.com. In
addition, a live webcast of this presentation to UK/European analysts
and investors will be available via http://www.sky.com/investors and
subsequently available for replay.

There will be a separate conference call for US analysts and investors
at 10.00 a.m. (EST) today. Details of this call have been sent to US
institutions and can be obtained from Dana Diver at Taylor Rafferty on
+1 212 889 4350. A live conference call and supporting materials will
be available on Sky's corporate website, http://www.sky.com/corporate.
A replay will be subsequently available.


                    This information is provided by RNS
          The company news service from the London Stock Exchange

END

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