Sky boosts marketing budget to fuel growth.

James Murdoch, the chief executive of BSkyB, is increasing the company's above-the-line marketing spend by up to 50 per cent in order to kick-start growth for the pay-TV giant.

Announcing a new target of ten million subscribers by the end of the decade at the unveiling of Sky's annual results, Murdoch has acted to counter City fears that the company's growth had stalled. But despite introducing measures designed to stimulate growth, Sky's share price fell 12 per cent.

The results revealed that Sky was on course to hit its target of eight million subscribers by the end of 2005, having already crossed the 7.4 million mark in June. But Murdoch acknowledged that there are still barriers holding back consumers from adopting pay-TV.

However, he said his new marketing initiatives would help overcome these and that in the long term, the penetration of pay-TV would increase from the current 43 per cent level to about 80 per cent of homes. This implies there could be a further ten million potential subscribers that could be converted to Sky.

In the year to June 2004, Sky spent pounds 49 million on its above-the-line advertising - up pounds 10 million on the previous year, with pounds 59 million spent on other marketing costs.

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