British Sky Broadcasting Group plc Q3 Earnings Conference Call (North American Analysts & Investors) - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Thank you and welcome to the British Sky Broadcasting Third Quarter Results Conference Call. Today's call is being recorded. Hosting the call will be James Murdoch, Chief Executive Officer and Jeremy Darroch, Chief Financial Officer.

This call is the property of British Sky Broadcasting. It may not be recorded for broadcast without the written permission of British Sky Broadcasting Group.

This Conference Call contains certain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 with respect to the group's financial condition, results of operation and business, and management strategy, the plans and objectives for the group. These statements may include without limitation those that express forecast, expectations, and projections with regard to the potential for growth of free to air and pay TV, advertising growth, DTH subscriber growth, and Multiroom and Sky Plus penetration, mobile and broadband penetration, DTH revenue, profitability and margin growth, cash flow generation, subscriber acquisition costs, and marketing expenditure, capital expenditure programs, and proposals for returning capital to shareholders.

These statements and all other forward-looking statements contained in this conference call are not guarantees of future performance and are subject to risks, uncertainties, and other factors; some of which may be beyond the group's control or difficult to predict and could cause actual results to differ materially from those expressed, or implied, or forecast in the forward-looking statements. These factors include, but are not limited to, the fact that the group operates in a highly competitive environment, the effect of the government regulations upon the group's activities; its reliance on technology, which is subject to risks, change, and development, its ability to continue to obtain exclusive rights to movies, sports events, and other programming content. Risks inherent in the implementation of large-scale capital expenditure projects. The groups' ability to continue to communicate and market its services effectively and the risk associated with the group's operation of digital television transmission in the U.K. and Ireland.

Information on some risks and uncertainties are described in the risk factor section of the Sky Interim Report on Form 6-K for the period ended 31 December 2005. Copies of the Interim Report on Form 6-K are available on request from British Sky Broadcasting Group, PLC, Grant Way Isleworth Middlesex TW7 5QD or from the British Sky Broadcasting Web page at HYPERLINK "http://www.sky.com/corporate" www.sky.com/corporate. All forward-looking statements in this conference call are based on information known to the group on the date hereof. The group undertakes no obligation publicly to update, or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

And now at this time I would like to turn the call over to Mr. James Murdoch, Chief Executive Officer. Please go ahead sir.

JAMES MURDOCH, CEO, BRITISH SKY BROADCASTING GROUP PLC: Thanks very much and hello everybody. Thanks for joining us today. I'm James Murdoch. With me this morning is Jeremy Darroch, our Chief Financial Officer. The highlights insured a quarter that saw us post year-to-date record operating profit of [pounds sterling] 650 million and incredible performance in terms of improvement and product mix, 86 percent growth in Sky Plus, our PDR product here, and 76 percent growth in Multiroom households to almost a million and since the end of the quarter we've now passed a million customers taking a Multiroom product from us.

Overall, it was a good quarter one that signals a strong underlying health and competitiveness of the business really across the board. And as we said at the Interim Results, our focus for the half of the calendar year would be on three major projects that would support and really position the business for future growth; and I'm very pleased to say the progress we've made has been good in the quarter and the team's executed against their three objectives very, very well.

Firstly, we completed the implementation of our new customer management systems. Now these systems represent a commitment to improve our already leading industry customer service and then allow us to continue to raise the bar in terms of that service, which is a critical differentiator for us against our competitors. It allows us to bring new products to market faster and more effectively and to improve sales, increasing our market effectiveness, and decrease churn through the use of state-of-the art management initiatives and our robust prospect database, which we've spoken to you about earlier. We've also announced plans to expand our customer service infrastructure and this includes creating 600 new jobs in our field engineering operations; and these new positions will support continued growth of the business and the launch of new products and services.

Now secondly, we've gotten ready for the national launch of high definition television in the U.K. Sky High Deck will redefine the mid to high end of television services in the U.K. and Ireland. It's the first national launch of a service of its kind. We're very pleased with the early demand and we think the desire to subscribe to HD will grow strongly throughout the calendar year.

Now thirdly, our broadband plans are well on track and we expect to launch residential broadband services this summer; and we'll provide you with details of about that broadband launch and the impact on the business much closer to the launch.

Now at the same time, the business continued to grow and is performing very well in line with the plans we laid out for calendar 2006. Total revenue is up 9 percent to [pounds sterling]3.1 …