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BSkyB Second-Quarter Profits Dip

Pay-TV operator British Sky Broadcasting Group reported a 3% drop in quarterly net profit Wednesday after it spent more money promoting its broadband services, but said it was still on track to meet its full-year targets.

BSkyB said that net income for the three months to Dec. 31 fell to 130 million pounds ($255 million; 197 million euros), from 134 million pounds a year ago.

The broadcaster, which is 38% owned by Rupert Murdoch's News Corp., said that it added 193,000 net new subscribers to its broadband service over the quarter, bringing the total to 8.4 million.

However, that was below the 215,000 subscribers added in the same quarter a year ago and slightly below analysts' expectations of 191,000.

Analysts were divided over the results announcement, and BSkyB shares were trading 0.5% lower at 542.5 pence ($10.60; 8.17 euros) by midmorning after a larger drop earlier in the session.

ABN Amro, which has a buy rating on the stock, said that the company was ahead of expectations on "key performance indicators" and advised investors to buy shares before the second half when profitability is expected to rebound.

Collins Stewart said the high churn in the Christmas sales period was disappointing and reiterated its sell rating on the stock.