BSkyB earnings fall 28% amid Virgin dispute

British Sky Broadcasting Group reported a 28% drop in profit in the first quarter as a dispute with cable provider Virgin Media and higher marketing costs undermined a rise in net new pay-TV customers, an Associated Press report said.

The Associated Press report quoted BSkyB as saying that the investment in new high-speed Internet products, a lawsuit filed by Electronic Data Systems, and the cost of Premier League soccer rights also added to the decline in net profit to 84 million pounds ($175 million) in the three months ended September 30. That was down from 116 million pounds in the same period a year earlier.

Revenue at the company, which is 39% owned by Rupert Murdoch's News Corp., was up 10.6% to 1.19 billion pounds ($2.47 billion), the report said.

BSkyB's marketing expenses rose 22% as it increased spending to attract new high-speed Internet subscribers, the report added.

The company began bundling broadband with TV in August 2006, tackling rival Virgin Media, which also offers combined services, head on. It added 223,000 net new broadband subscribers in the quarter.

BSkyB's content dispute with Virgin Media also affected profits, the Associated Press report further said.

Virgin Media, formed by a merger this year between Richard Branson's Virgin Mobile and cable operator NTL, stopped airing BSkyB's basic channels in March after the companies failed to agree on price, the report further said.