British Sky Broadcasting yesterday staked its claim in the internet with plans to spend £250m on the development of online services which build on its television brands over the next 12 to 18 months.
The company also confirmed the establishment of a joint venture with telecoms company Kingston Communications to pump pay-TV and internet services down telephone cables in a further departure from its core satellite distribution business.
Investors reacted enthusiastically to the plans, along with unexpectedly high subscriber numbers during the past six months, which nudged 4m for the first time. BSkyB shares ended the session 18% higher at £19.15p, continuing a rise which has seen the price almost double since the beginning of the year.
BSkyB chief executive Tony Ball said the £250m would be invested in building up sky.com and skysports.com as well as developing new portals around news and entertain ment. Mr Ball said he aimed to make the sports site Britain's most popular from its present third place by the year's end.
"We see the convergence of media as a huge opportunity," he said. "I want to leverage Sky brands on all devices, whether PCs, broadband, TV or on mobile handsets." The company is close to a deal with BT Cellnet to provide content for its internet-enabled mobile phones.
The cash will also be used to buy stakes in existing web businesses which can provide content for the Sky services. Among the announcements yesterday was BSkyB's investment in books and music e-tailer Streets OnLine and Static, an interactive TV design consultancy. The company also launched a Sky branded online sporting goods retailer.
BSkyB experienced record subscriber growth in its direct to home service during the last three months of 1999 of 384,000, taking the total to just under 4m, of which 2.1m were digital. Mr Ball said the total could feasibly reach 5m by the end of the year. Another 4.4m people subscribe to Sky channels through either cable or terrestial rival ONdigital.
The increasing costs of acquisition, including the price of the free set-top box campaign pushed BSkyB into the red for the first half, recording a loss before tax of £61.5m compared to profits of £53.2m last year. Turnover was 13% higher at £849.7m.
Shares in Kingston climbed 24% to £12.52, which means that Kingston-upon-Hull city council, the company's major shareholder, is now sitting on a stake worth around £2bn.
