Digital, interactive expansion pushes BSkyB losses to $350m

The share price of British Sky Broadcasting, the satellite television group, dropped 6 per cent yesterday after it reported a near-five-fold increase in third quarter, pre-tax losses to $NZ356.5m (£s:106.7m). The losses reflected rising costs to expand digital television and interactive services.

News Corporation, which owns a 37.5 per cent stake in BSkyB, reported separately that third quarter after-tax earnings, hurt by softer conditions for US television advertising and lower returns from its Fox studio division, fell 34 per cent to $294m. Rupert Murdoch is chairman of both companies and is News Corp's controlling shareholder.

BSkyB said it was taking a $134m charge to restructure Open, its TV shopping platform. It will close the unit's central London headquarters and cut 300 jobs as Open and other interactive programming services are joined in a new Sky Interactive division.

John Swingewood, BSkyB's director of new media, is to quit, but will continue as an adviser. The new unit will be headed by John Florsheim.

The revamp of interactive operations comes after BSkyB has spent more than $2.3bn in building a number of services, including TV-based shopping as well as online news and sports content.

Last year, it acquired Sports Internet Group for $1bn in stock, while on Tuesday it received regulatory approval to buy out its interactive partners Matsushita and HSBC for a total of $1.3bn.

Talks are believed to be under way with British Telecom about buying its 19.9 per cent interest in the interactive activities.

- INDEPENDENT