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2658/Sky Master AR British Sky Broadcasting Group plc Annual Report 2000 Delivering our vision 01 Introduction 02 Delivering Our Vision 07 Chairman’s Statement 08 Chief Executive’s Statement 12 Operating and Financial Review 16 A Year of Achievement 17 The Future is Here 18 Delivering Digital 20 Multi-Service on Demand 22 Building Customer Relationships 24 The Way Ahead 25 Operational Review 26 Distribution, Sales & Service 30 New Media 34 Sky One 36 Sky News 38 Sky Sports 42 Sky Movies & Sky Box Office 44 Sky Pictures & Sky Productions 46 Sky Ventures 48 Advertising 50 Digital Channel Line-up 52 Accounts Since the launch of Sky digital, we have connected over 3.6 million digital subscribers, with a target of five million digital customers by the end of the year. Delivering Our Vision. Nothing less will do. We are making every day extraordinary for every one of our customers. As a seamless, multi- service communications company, Sky’s mission is to deliver compelling content and e-commerce both to the home and to people on the move. We’re changing the way people watch TV and the way we communicate, empowering consumers with tomorrow’s technology today. British Sky Broadcasting Group plc 01 Introduction Due to the significant increase in subscribers to our services, we now handle up to one million calls per month. British Sky Broadcasting Group plc 02 Delivering Our Vision Sky’s flagship portal, sky.com, attracts around 40 million page impressions a month. Combined with skysports.com and sites gained with the acquisition of Sports Internet Group, the number of page impressions totals more than 70 million a month. British Sky Broadcasting Group plc 03 Delivering Our Vision Sky Sports staged over 700 outside broadcasts in the past year. BSkyB secured the rights to broadcast the Premier League, FA Cup and all England home internationals until the end of the 2003-2004 season. British Sky Broadcasting Group plc 04 Delivering Our Vision In July 2000, BSkyB reached an agreement to increase its stake in Open from 32.5% to 80.1% subject to regulatory approval. Open has become the largest television e-commerce platform in the UK with access to over nine million people through televisions in 3.6 million homes. British Sky Broadcasting Group plc 05 Delivering Our Vision Almost 80% of the Direct to Home (“DTH”) base is now digital. Digital transition is expected to be completed in June 2001. British Sky Broadcasting Group plc 06 Delivering Our Vision Chairman’s Statement Sky has made impressive gains media through organic development, FORGING STRONG, DEEP AND PROFITABLE over the year with digital subscriber acquisitions, partnerships and joint RELATIONSHIPS WITH OUR CUSTOMERS numbers more than quadrupling ventures to make a virtual circle and investments in Europe and new between on-air and on-line provision media presenting opportunities for of compelling content. When other continued growth and expansion. broadband technologies permit, BSkyB will use its marketing strengths Once again, I would like to pay to encourage acceptance. tribute to all Sky staff for their flair and commitment which gives By forging strong, deep and profitable the company the strength it has. relationships with our customers, Together, they are building one of the across an array of devices, we want most innovative and entrepreneurial them to value the hours they spend media companies in the world. using our services. We want them to stay longer and visit more frequently, Results naturally looking to us for all forms Sky digital subscribers totalled of entertainment, information and 3.6 million at the end of the financial communication. year – a record annual growth of over one million new digital customers in The Sky brand is the perfect umbrella 12 months. Our large investment in for this. We will try to anticipate what free set-top boxes has stimulated consumers want and how they want strong take-up of digital TV, and I to access it, and offer a customised remain confident that this will bring experience. I am determined that our large returns in the near future. drive for innovation must extend to customer service and that this clearly Opportunities for companies to differentiates us from our competitors. acquire true market leadership are rare, and BSkyB is uniquely Management positioned to achieve this on the There have been a number of changes back of our investment in hardware, to the Board during the year, which programmes and technologies. are discussed further on within this document. I would like to mention, More than nine million households however, Dame Anne Mueller, who enjoy Sky programmes – an all-time had been a Director of the Company high. We intend to keep these since 1991 and retired on 28 April, households and others at the who passed away in July. Dame forefront of digital entertainment Anne was always a strong contributor and information technology, helping to our Board deliberations and will be them navigate effortlessly through sadly missed. the new media environment with seamless Sky content on all devices. I again congratulate and thank all our employees who are making this Rupert Murdoch From digital television and Open, we company such an outstanding Chairman are now moving decisively into new success. British Sky Broadcasting Group plc 07 Chairman’s Statement British Sky Broadcasting Group plc 08 Chief Executive’s Statement Chief Executive’s Statement The past year has seen the Digital customer retention is THIS YEAR HAS SEEN A FOCUS ON DELIVERY Company make its digital vision significantly better than analogue, a reality. With a million new digital indicating greater customer subscribers joining between July satisfaction and the success of 1999 and June 2000, and nine million new loyalty schemes. As digital subscribing to Sky’s channels in customers buy more premium-priced total, we have named the date for channels, annual average revenue switching off our current analogue per DTH subscriber is now £287, an service while others are still talking increase of £18 on last year. In short, of rolling out digital services. the free box strategy is working. It was the best year since 1992-1993 Award-winning programming for new business, with the Christmas Keeping customers satisfied quarter beating our previous record demands compelling content and by 30%. The mix of entertainment top quality service. Altogether, Tony Ball available on Sky digital and the Sky invested almost £1 billion in Chief Executive interactive innovations launched this programming during the year. The year make the platform a compelling Royal Television Society awarded consumer proposition. Sky a prestigious Gold Medal for ten years’ service to broadcasting. Sky We took an important step during the also won an Emmy, the Sundance year by agreeing to increase our stake World Cinema Audience Award, and in Open to over 80%, subject to the Royal Television Society News regulatory approval, and will build on Event Award. We continue to raise our its success by introducing enhanced commitment to invest in programming applications to broaden the range and of world-class standard. quality of its e-commerce services. We also remain open to opportunities In addition to our own original movies outside the domestic market where and television productions, we our leadership in digital TV would continue to showcase the biggest hit add value. The acquisition of a 24% programmes from around the world, stake in KirchPayTV, completed in including the first British showings of May 2000, takes Sky into Germany, such series as Star Trek, Pokémon potentially continental Europe’s largest and The Simpsons. We were delighted and most valuable television market. to learn in June that our bids for the live coverage of 66 Premier League Financial perspective matches for three seasons from 2001, Turnover of £1,847 million was up as well as for FA Cup and England 20% on last year. Direct to Home internationals, had been successful. (“DTH”) revenue increased by 21% We look forward to maintaining to £1,189 million, reflecting a 13% relationships that are good for increase in the average number of football, good for customers and subscribers and a 7% increase in good for the media industry. the average revenue per subscriber. Operating profits before exceptional Delivering digital items were £85 million. Loss before When bandwidth is no longer a tax and exceptional charges was constraint, only outstanding service £142 million. will separate the good from the merely adequate. Great service leads Digital success to strong customer relationships, and The Company’s core business is better understanding of customer performing well in all respects. The requirements in turn creates free set-top box offer initiated in opportunities to generate revenue. May 1999 accelerated the creation of a large customer base, with the Tremendous effort has gone into target of five million subscribers customer service to meet the by December 2000 in prospect. demand for Sky digital. In the run-up British Sky Broadcasting Group plc 09 Chief Executive’s Statement Sky Sports has secured the rights for the Premier League, FA Cup and England Internationals until the end of 2003-2004 season. British Sky Broadcasting Group plc 10 Chief Executive’s Statement to Christmas 1999, when some and new media retailers, and content creating innovative and consumer- 100,000 customers a week were providers allowing us to drive Open’s friendly TV-based e-commerce signing contracts, we achieved up to revenues by offering even more platforms. Skysportsstore.com, our 70,000 installations each week thanks compelling content. first retail commerce venture, will to a new recruitment and training launch in Autumn 2000. E-commerce programme for installation engineers. Enhanced television assets such as skysportsstore.com Launched shortly after the 1999-2000 and on-line betting from Surrey Quality of service is a key factor football season began, Sky Sports Sports, will be available on many influencing the consumer’s choice Extra was an immediate hit with new platforms and devices.
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