MIDDLESEX, UK--(Marketwire - October 22, 2010) -


        Results for the three months ended 30 September 2010

CONSISTENT Strategy Delivering strong Operational and Financial Results

Record Q1 net product growth of 989,000, up 12% on the prior year

* Net customer growth of 96,000 to reach 9.956 million households

* Net additional Q1 product sales up 13% to 893,000

* 2.3 million customers now taking all three of TV, broadband and
  telephony, up by 39%; broadband growth accelerates with 178,000 net

* Further good growth in HD with net additions of 215,000 to reach
  3.2 million customers

* Plans to support growth with opening of new contact centre,
  creating 500 jobs

More great content for customers

* New channel 'Sky Atlantic HD' launching as the home of HBO and'Mad Men'

* The Masters golf live from 2011

* Over 50 HD channels now available to Sky customers

More innovation for customers

* Successful launch of Europe's first dedicated 3D channel 'Sky 3D'

* Beginning rollout of Sky Anytime+ on-demand service

Converting into strong growth in revenue, profit and cash flow(1)

* Revenue up 15%, with strong growth in subscription, advertising
  and wholesale

* Operating profit up 25% to GBP255 million; margin expansion of 140
  b.p. to 16.7%

* Basic EPS of 9.7 pence, up 33%

* Free cash flow up GBP156 million on the prior year to GBP65 million

(1) Revenue, operating profit and basic EPS are stated excluding
exceptional items and from continuing operations (excluding the Easynet
operations divested on 1 September 2010, and including Living TV
Group). Free cash flow is from continuing operations.

Results highlights

Customer Metrics (unaudited)

                                   Quarterly Net Additions  Closing

Base'000s                             30-Sep-10   30-Sep-09   30-Sep-10

Net Customer Additions                   96          94       9,956
Net Growth in Additional Products:
Sky+HD                                  215         287       3,154
Multiroom                                37          62       2,158
Broadband                               178         100       2,802
Telephony                               203         132       2,570
Line rental                             260         209       1,946
                                        893         790      12,630
Total Net Product Growth                989         884      22,586

Other Metrics
Gross additions for the quarter         374         362
Churn for the quarter (annualised     11.2%       11.3%
ARPU (GBP)                           GBP514      GBP469

Business Performance (unaudited)(1)

GBP'millions                   3 months to     3 months to           %
(from continuing operations)        Sep-10          Sep-09    movement
Revenue                              1,526           1,330         15%
Adjusted operating profit(2)           255             204         25%
% Adjusted Operating Profit          16.7%           15.3%
Adjusted EBITDA(2)                     335             279         20%
Adjusted basic earnings per
share(3)                              9.7p            7.3p         33%
Free Cash Flow                          65            (91)

Statutory Results (unaudited)(1)

GBP'millions                   3 months to     3 months to           %
(from continuing                    Sep-10          Sep-09    movement
Revenue                              1,526            1,330        15%
Operating profit                       248              204        22%
Cash generated from                    217              119        82%
Basic earnings per share             10.5p             7.7p        36%

1 All comparatives are restated to reflect continuing operations,
excluding the Easynet operations divested on 1 September 2010
2 A reconciliation of adjusted operating profit and adjusted EBITDA from
continuing operations to reported measures and cash generated from
operations to free cash flow is set out in Appendix 3.
3 Adjusted basic EPS is calculated from adjusted profit from continuing
operations for the period. A reconciliation of reported profit to
adjusted profit for continuing operations is set out in note 4 to the
consolidated financial information.

Jeremy Darroch, Chief Executive, said:"Today's results show that our
consistent strategy is delivering an
excellent performance in a challenging environment. Strong top-line
growth is converting to accelerating profit and earnings."Operationally, we
have made a very good start to the year with 96,000
net customer additions and record take-up of our additional
subscription products. In particular, our focus this quarter on home
communications has been rewarded with our highest ever take-up of
broadband, telephony and line rental, alongside further good growth in
high definition. To support our continued growth, we plan to open a new
contact centre next year with the creation of 500 jobs."This performance,
combined with our continued emphasis on operational
efficiency, is translating into strong financial results. We've
delivered 15% growth in revenue, 25% growth in operating profit, 33%
growth in earnings per share and our operating margin increased for the
third consecutive quarter. These results are underpinned by continued
investment in content and innovation, which is bringing more value to
customers and growing returns for shareholders."


In the three months to 30 September 2010 ("the quarter"), we saw
further good DTH customer growth and an outstanding take-up of
additional products.

Net DTH additions for the quarter were 96,000, taking our total number
of customers to 9.956 million. Within this, gross additions were up 3%
at 374,000 and churn was stable at 11.2%, in what remains a challenging
consumer environment.

We are executing well against our multiproduct strategy and customers
are choosing to take more of our products. Following three very strong
quarters of growth in HD, we turned the focus of our marketing to home
communications and saw an excellent response from customers. We
achieved the highest ever combined quarterly growth rate in broadband,
telephony and line rental customers, contributing to record first
quarter net additional product sales of 893,000 - up 13%. As customers
respond to our great value products and reward us with more of their
business, ARPU reached a new high of GBP514 per annum. Importantly, each
new customer and additional product makes a positive contribution and,
together with our continued focus on operating efficiency,
profitability was strong with adjusted operating margin from continuing
operations up by 140 basis points year on year.

In support of continued customer growth and additional product take-up,
we will create 500 new customer-facing roles with the opening of a new
contact centre facility next year.


We continue to invest on screen to bring more great content to
customers. In sports, Sky Sports News became exclusive to pay TV and
available in HD, and, with the return of Monday Night Football, we are
bringing customers 23 additional live Premier League matches this
season. We have also acquired new sports rights during the quarter,
with an agreement to broadcast the Masters golf tournament from April
2011. Sky Sports will be the only broadcaster in the UK and Ireland to
screen all four tournament days live, together with exclusive live
coverage of Wednesday's Par-3 competition for the first time. All Sky
coverage of the Masters will be in HD, and it will be the first of
golf's Majors to be broadcast in 3D. Our expanded breadth and depth of
sports coverage is attracting new customers, with the highest ever
first quarter level of Sky Sports subscribers across all platforms.

We are making good progress with our arts and entertainment channels.
This quarter we completed our acquisition of the Living TV Group and
announced the launch of an entirely new channel, Sky Atlantic HD, in
early 2011. In addition to Sky1 and Sky Arts, these channels will
extend our top quality entertainment portfolio, all of which will be
available in HD. Sky Atlantic HD will be the exclusive home of new HBO
series, as well as our recent acquisition of 'Mad Men' from season five
onwards, and a range of new UK programming to complement Sky1's
emphasis on drama and comedy.

The addition of Living complements our existing channel line up, with a
strong female viewership and attractive demographic profiles. The sixth
- and most watched - series of 'Britain's Next Top Model' concluded in
October, achieving an average audience of 700,000 per show. Looking
ahead, Living has a strong schedule, with brand-new US drama 'Nikita',
a new series of 'America's Next Top Model' and 'Party Wars', a 'Four
Weddings' spin-off.

Sky1 continues its track record of bringing more talked about
programming to customers. Our search for new music talent, 'Must Be The
Music', concluded this quarter and achieved a weekly cumulative
audience over 800,000. 'An Idiot Abroad', featuring Karl Pilkington and
Ricky Gervais, has started strongly with the opening episode achieving
an audience of 1.8 million viewers. In-house commissions airing through
the Autumn include the original UK drama 'Thorne', starring David
Morrissey and Natascha McElhone.


Sky 3D, Europe's first in-home 3D channel, launched with live coverage
of golf's Ryder Cup on 1 October 2010. The channel will showcase a wide
range of 3D programming including sport, movies, documentaries, arts
and entertainment. The channel is available at no extra cost to top
tier HD subscribers, adding further value to the GBP10 monthly HD

We also have a pipeline of products maximising the benefits of the
broadband connectivity of the HD box. From the end of October we will
begin the phased roll-out of our full on-demand service. 'Anytime+'
will give customers access to over 600 movies from the Sky Movies and
Sky Box Office collections, as well as entertainment, documentaries,
children's programming and classic sport.

We are also building on the flexibility of our offering by giving
customers new and innovative ways to enjoy our products. We are now the
leading media provider in the UK on mobile and tablet platforms, with
over 7.5 million Sky apps downloaded on iPhone, iPod touch and iPad.

Leadership in HD

We continue to see good demand for our high quality and great value HD
offering, such that today, 32% of customers choose to pay for our HD
service. We achieved a further 215,000 net additions in the quarter to
surpass three million HD customers. We still see good headroom for
growth. Ownership of HD TV sets continues to rise and this calendar
year will see the number of HD-ready households exceed standard
definition homes.

This quarter we announced several landmarks in HD. We launched Europe's
first HD sports news service - Sky Sports News HD - and announced a
further enhancement to our channel line up by bringing across to the
pay window the high definition versions of some of the UK's most
popular channels, ITV 2, ITV 3 and ITV 4. Our customers now have, in
total, access to over 50 HD channels; over 70% more than that currently
available on any other TV platform.

Broadband and Telephony

After an extended period of focus on HD growth, we shifted our
marketing focus to home communications products this quarter. Following
a successful advertising campaign we delivered the highest ever
combined take-up of broadband, telephony and line rental, 36% higher
than the prior quarter.

Over 50% of new DTH customers in the quarter joined us with all three
of TV, broadband and telephony. As a result, the percentage of total
customers choosing to take all three products increased by six
percentage points to 23%. As customers respond to our high quality and
great value products we added 178,000 broadband and 203,000 telephony
customers - the highest quarterly growth rate for over two years. In
addition, we now have over one million customers on our fully unbundled

We continue to see significant headroom with 7.7 million customers yet
to take all three services; with each broadband customer making a
positive contribution, the economics of growth are attractive going

The Bigger Picture

As part of our commitment to making a positive contribution to the
community, we delivered a number of initiatives in the quarter through
our Bigger Picture programme.

One of our objectives is to encourage participation in sport. During
the quarter more than 200,000 people got on their bikes at 12 Sky Ride
events in 10 cities across the UK, including Manchester, Glasgow,
Birmingham and London. Smaller local led rides are taking place

Another objective is to open up the arts to more people. Through our
partnership with public art company Artichoke, Sky Arts supported the
Magical Menagerie, a large-scale working carousel of mechanical
creatures aimed at adults and children. This was the centrepiece of The
Milton Keynes International Arts Festival and was visited by 28,000
people over the course of the Festival. As media partner to the event
we also showed a documentary about Magical Menagerie and the artists
behind its creation on Sky Arts.

In September, we published our Bigger Picture Review 2010 at
www.sky.com/thebiggerpicture. It contains further detail of our Bigger
Picture activities and commitment to acting responsibly, including
audited environmental data for the 2009/10 financial year.


We are generating strong rates of revenue growth on the back of
continued customer and product growth. We balance that revenue growth
with continued investment for the long-term and remain disciplined on
non-customer facing costs. This approach is allowing us to build
foundations for the future and at the same time accelerate returns for

Total revenue growth of 15% was the result of strong performances in
our retail subscription business together with wholesale and
advertising. Wholesale revenue benefited from the first time
consolidation of Living TV Group and reflected a mixed operational
performance from our wholesale partners. Adjusted operating profit
increased by 25% to GBP255 million as we progress through the investment
cycle. Adjusted operating margin increased to 16.7%, an improvement of
140 basis points on the prior year and the third consecutive quarterly

Our strong operational performance in home communications translated
into a 39% increase in broadband and telephony revenue, to GBP187
million, more than offsetting growth in direct network costs of 32%
resulting in an improved gross margin from 27% to 31%.

The results for the period include the acquisition of Living TV Group
which completed on 12 July 2010, and was subsequently fully integrated
following clearance from the Office of Fair Trading on 14 September. In
the quarter, Living TV Group added GBP27 million in revenue (of which GB
P20 million is advertising; GBP6 million is wholesale; and GBP1 million
is other revenue) and GBP23 million of costs (of which GBP13 million is
programming; GBP1 million is marketing; GBP5 million is transmission,
technology and fixed networks; and GBP4 million is administration). We
incurred exceptional restructuring costs of GBP5 million in the quarter
relating principally to redundancy payments. These restructuring costs
are included within reported operating profit of GBP248 million and
excluded from adjusted figures.

Unless otherwise stated, all figures and growth rates included within
the financial section exclude exceptional items and are from continuing
operations (including Living TV Group from 12 July and excluding
Easynet from both the current year and the prior year comparative).


Group revenue increased to GBP1,526 million (2010: GBP1,330 million), up
15% year on year.

Retail subscription revenue increased by 14% to GBP1,275 million (2010:
GBP1,115 million), reflecting continued customer growth and success in
our multiproduct strategy which delivered a 4% increase in the customer
base and a GBP45 increase in ARPU.

Wholesale subscription revenue increased by 24% to GBP68 million (2010:
GBP55 million), reflecting the higher number of subscribers to premium
channels and the first full quarter of revenues from the Living TV
Group acquisition. Excluding Living TV Group, wholesale revenues
increased 13%.

Advertising revenue increased 46% to GBP102 million (2010: GBP70
million)as a result of continued growth in pay TV customers as well as
our acquisition of the Living TV Group and our agreement with Viacom. We
estimate our share of the overall TV advertising sector increased by
around three percentage points year on year to 17.6% leading to
continued outperformance of the sector, which we estimate grew by 15.2%
year on year. Advertising revenue now includes revenue related to our
online properties and Sky Magazine; of which GBP5 million was
reclassified from 'other revenue' in the quarter and GBP5 million in the
prior year comparative. Incorporating the reclassification and
excluding Living TV Group, advertising revenue was GBP82 million and
grew 17% on a like for like basis.

Installation, hardware and service revenue was GBP30 million (2010: GBP4
6 million), reflecting the lower prices paid by customers following our
price reduction for Sky+HD boxes in January 2010.

Other revenue of GBP51 million (2010: GBP44 million) was 16% higher,
benefitting from a good performance in Sky Bet and a contribution from
Living TV Group. Excluding Living TV Group, the online properties and
Sky Magazine revenue (which has been reclassified to advertising
revenue), other revenue was 14% higher.

Direct Costs

Programming costs increased by 10% to GBP482 million (2010: GBP439 milli
on)as we continue to prioritise investment to underpin future growth.
Further investment in sports and entertainment accounted for the
majority of the increase, as we expanded the depth and breadth of our
offering to give customers more reasons to subscribe. Sports costs were
higher due to additional Premier League and other rights such as the
England away internationals. The first-time inclusion of Living TV
Group contributed to higher entertainment costs year on year, partially
offset by carriage fee savings in third party channels. Other third
party channel costs were higher due to the launch of three HD channels
and movie costs were lower reflecting improved terms on contract

Direct network costs increased by 32% to GBP129 million (2010: GBP98
million) as a result of strong customer growth in home communications
which led to 39% revenue growth in broadband and telephony.

Other Operating Costs

Marketing costs increased by GBP58 million to GBP302 million (2010:
GBP244 million) with increased investment in successful marketing
campaigns in home communications and Sky Sports ahead of the Premier
League season,both of which delivered record performance in the quarter.

Subscriber management and supply chain costs fell by GBP15 million to
GBP142 million reflecting our continued focus on operational efficiency.
The largest cost savings were achieved in supply chain, due to higher
customer self-service volumes and lower box costs through greater

Transmission, technology and fixed network costs increased by GBP19
million to GBP91 million. Excluding the first time inclusion of Living
TV Group (GBP5 million), the majority of the increase relates to higher
net transponder costs. The stronger Euro has driven absolute transponder
cost increases, and the use of more capacity for our own HD channels
has reduced income previously received from sub-leasing to third
parties. We have also seen a phasing impact of higher renewal fees on
certain transponders. This phasing impact will reverse over the course
of the year as lower pricing on other transponders comes into effect.

Reported administration costs of GBP132 million (2010: GBP116 million)
include GBP7 million of exceptional costs (please refer to the'Exceptional
Items' paragraph below). Excluding exceptional items,
administration costs increased by GBP9 million to GBP125 million (2010:
GBP116 million), of which GBP8 million is due to an increase in the
Group's non-cash IFRS 2 'Share-based payment' charge and associated
National Insurance costs. This increase is mainly due to the phasing of
the Group's share based compensation schemes and the increase in the
share price when compared with the prior year, despite the volumes of
awards made remaining broadly constant. Excluding this amount and the
consolidation of Living TV Group costs of GBP4 million, administration
costs were broadly level year on year. The IFRS 2 charge and related
tax and National Insurance costs for the year is expected to be around
GBP75 million, an increase of GBP30 million.


On an adjusted basis, profit before tax from continuing operations was
GBP232 million (2010: GBP177 million) and included the Group's share of
joint ventures' profits of GBP7 million (2010: GBP6 million) and a net
interest charge of GBP30 million (2010: GBP33 million).

Adjusted taxation was GBP63 million (2010: GBP50 million). The adjusted
tax charge on continuing operations for the year is expected to be
approximately 27% (2010: 28%). The decrease reflects the reduction in
the rate of UK Corporation Tax, the effect of share price movements on
the tax accounting for share options and the lower effective tax rate
on joint venture income. The forecast full year effective tax rate
includes the impact to the income statement of calculating UK deferred
tax balances at the reduced UK tax rate of 27%; the impact of this is

Adjusted profit for the period from continuing operations was GBP169
million (2010: GBP127 million), generating an adjusted basic earnings
per share from continuing operations of 9.7 pence (2010: 7.3 pence).

Including all exceptional items, profit before tax for the period of
GBP230 million (2010: GBP186 million) includes the Group's share of
joint ventures' profits of GBP7 million (2010: GBP6 million) and a net
interest charge of GBP25 million (2010: GBP24 million). Reported
taxation was GBP 48 million (2010: GBP52 million) resulting in profit
for the period from continuing operations of GBP182 million (2010:
GBP134 million) and basic earnings per share of 10.5 pence (2010: 7.7
pence). Please refer to the'Exceptional Items' paragraph for more

Over the entire period the weighted average number of shares excluding
those held by the Employee Share Ownership Plan for the settlement of
employee share awards was 1,745 million.

Cash Flow and Financial Position

Cash generated from continuing operations was GBP98 million higher at
GBP217 million (2010: GBP119 million) as a result of EBITDA growth and
improved working capital.

Capital expenditure was GBP101 million (2010: GBP107 million) with the
main items of expenditure in the period being the technical fit-out of
our new broadcast facility and investment supporting broadband growth
including the rollout to a further 93 exchanges. We expect to maintain
this quarterly run-rate of capital expenditure for the remainder of the
fiscal year and for capex over the medium term to be sustainable at a
ratio of around 6.5% of sales.

After interest, cash taxes, and capital expenditure, free cash flow was
GBP65 million, an improvement of GBP156 million on the prior year. Net
cash outflow from continuing operations improved year on year to GBP88
million (2010: outflow of GBP112 million) and included a one-off
payment for the Living TV Group. Net debt as at 30 September 2010 was
GBP1,086 million (2010: GBP1,857 million) as a result of improved cash
from operations in addition to the disposal proceeds of our ITV stake
and EDS settlement.

Exceptional Items

Reported operating profit of GBP248 million included GBP5 million
restructuring costs following the acquisition of the Living TV Group
and GBP2 million of advisory fees relating to the News Corporation
proposal. Both of these costs were classified as administration costs.

Reported profit after tax also included a GBP20 million exceptional
gain, of which GBP5 million was a gain relating to the remeasurement of
derivative financial instruments not qualifying for hedge accounting
(2010: GBP9 million gain) and a GBP15 million non-cash tax credit for a
tax settlement relating to the network operations retained from the
Easynet business.


News Corporation Proposal
On 10 June 2010 the Group received a proposal from News Corporation
that could lead to an offer for the entire share capital of BSkyB not
already owned by News Corporation ("the Proposal"). The Proposal, which
is not a formal offer, is subject to regulatory and financing
pre-conditions which add considerable uncertainty to when and whether
any formal offer could be made.

For further detail of the Proposal please refer to the Group's
statement of 15 June available on our Corporate website (www. sky.com/

Living TV Group
On 13 July 2010 we announced that we had completed our acquisition of
the Living TV Group (then named Virgin Media TV). On 14 September we
received formal clearance from the Office of Fair Trading. The
acquisition is expected to be earnings accretive before restructuring
costs in this financial year.

On 1 September 2010, we completed the sale of our business-to-business
telecommunications operation, Easynet Global Services, to LDC, a
leading UK private equity company for consideration of GBP100 million.
The results of Easynet Global Services for the period to 1 September
2010 have been disclosed as a discontinued operation and the
comparatives have been restated accordingly.

SEC Deregistration
Following the delisting of the Company's ADSs on the New York Stock
Exchange, the Company filed to terminate the registration of its
ordinary shares with the U.S. Securities and Exchange Commission
("SEC"). The termination became effective on 18 August 2010. The
Company no longer has SEC reporting obligations.



Francesca Pierce                       Tel: 020 7705 3337
Lang Messer                            Tel: 020 7800 2657

E-mail: investor-relations@bskyb.com


Robert Fraser                          Tel: 020 7705 3000
Bella Vuillermoz                       Tel: 020 7705 3000

E-mail: corporate.communications@bskyb.com

Click on, or paste the following link into your web browser, to view
the associated PDF document.


A conference call for UK and European analysts and investors will be
held at 08.30 a.m. (BST) today. Participants must register by
contacting Emily Dimmock or Yasmin Charabati on +44 20 7251 3801 or at
bskyb@finsbury.com. In addition, the live conference calls and
supporting materials will be available via http://www.sky.com/investors
and subsequently available for replay.

There will be a separate conference call for US analysts and investors
at 10.00 a.m. (EST) today. Details of this call have been sent to US
institutions and can be obtained from Dana Diver at Taylor Rafferty on
+1 212 889 4350. A live conference call and supporting materials will
be available on Sky's corporate website, http://www.sky.com/corporate.
A replay will be subsequently available.

Use of measures not defined under IFRS

This press release contains certain information on the Group's
financial position, results and cash flows that have been derived from
measures calculated in accordance with IFRS. This information should
not be read in isolation of the related IFRS measures.

Forward-looking statements

This document contains certain forward-looking statements with respect
to our financial condition, results of operations and business, and our
strategy, plans and objectives. These statements include, without
limitation, those that express forecasts, expectations and projections,
such as forecasts, expectations and projections with respect to the
potential for growth of free-to-air and pay television, fixed line
telephony, broadband and bandwidth requirements, advertising growth,
Direct-to-Home ("DTH") customer growth, Multiroom, Sky+, Sky+HD and
other services' penetration, churn, DTH and other revenue,
profitability and margin growth, cash flow generation, programming
costs, subscriber management and supply chain costs, administration
costs and other costs , marketing expenditure, capital expenditure
programmes, and proposals for returning capital to shareholders.

Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, these statements (and all
other forward-looking statements contained in this document) are not
guarantees of future performance and are subject to risks,
uncertainties and other factors, some of which are beyond our control,
are 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 we operate in a highly competitive environment, the
effects of laws and government regulation upon our activities, our
reliance on technology, which is subject to risk, change and
development, failure of key suppliers, our 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, our ability to continue to communicate and market
our services effectively, and the risks associated with our operation
of digital television transmission in the United Kingdom ("UK") and
Republic of Ireland ("Ireland").

Information on the significant risks and uncertainties associated with
our business is described in "Directors' report - Business review -
Principal risks and uncertainties" section of Sky's Annual Report for
the year ended 30 June 2010. Copies of the Annual Report are available
from the British Sky Broadcasting Group plc web page at www.sky.com/
corporate. All forward-looking statements in this presentation 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.

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