British Sky Broadcasting Group plc Results for the Six Months Ended December 31, 1999; 4 Million DTH Subscribers.

Business/Entertainment Editors

LONDON--(BUSINESS WIRE)--Feb. 9, 2000

British Sky Broadcasting Group plc (NYSE: BSY), the UK-based pay-television broadcasting group, today announced its results for the six months ended December 31, 1999.

INTERIM HIGHLIGHTS

-- Digital sales of 2.6 million to date -- (pound)250 million ($406 million) investment in Sky New Media

Ventures to develop sky.com and skysports.com

-- (pound)50 million ($81 million) investment in a next generation,

digital-ready customer contact center

Tony Ball, Chief Executive of British Sky Broadcasting Group plc, said:

&uot;We have now achieved over 2.6 million digital sales and, with

uptake from new subscribers remaining, we will maintain our focus

on the continued roll-out of digital, and adding value to the

digital service.

We have today announced a major investment in Sky New Media

Ventures to develop sky.com to enhance the presence of the Sky

brand and content in the new media field, with the objective of

skysports.com becoming the number one sports portal, reflecting

the reputation Sky Sports has achieved in sports broadcasting.&uot;

BUSINESS REVIEW

Distribution

Total subscribers to Sky's channels increased by 543,000 in the three months to December 31, 1999 (&uot;the quarter&uot;). Of the total 8,404,000 subscribers, 7,799,000 are in the UK, and 605,000 in Eire. The number of total direct-to-home (&uot;DTH&uot;) subscribers increased by a record 384,000 to 3,966,000 in the quarter - more than 30% greater than the previous highest quarterly growth of 290,000 in the first quarter of 1993/94. The total number of digital subscribers is now greater than 2.3 million.

The quarter saw the rate of take up of Sky digital continue to increase with subscriber growth of 796,000 compared with 531,000 in the first quarter. The number of total new digital subscribers for the half year was 699,000. Over 50% of all DTH subscribers are now on the digital platform. During December, Sky installed over 70,000 digital boxes per week with new subscribers representing 70% of total installations.

Analogue churn during the six months to December 31, 1999 (&uot;the period&uot;) decreased to 201,000 compared to 256,000 in the same period last year despite the analogue price increase in September. Encouragingly, digital churn remains at negligible levels at just 15,000 in the period bringing the cumulative number of subscribers who have churned off digital to 23,000, less than 1% of total sales.

Services

Sky's subscriber management centers have dealt with record call volumes, answering over 24 million calls during the period. Over 4,000 full time equivalent staff are now employed, significantly improving call success rates between the first and second quarters.

Whilst providing a customer service which reflects best practice today, Sky is committed to leading innovation in customer service and plans to invest up to (pound)50 million ($81 million) in upgrading its existing customer contact centers in Scotland with state of the art technology and processes. It will be operational within 12 months.

This will set the standard of customer service in television. The upgraded contact centers will allow Sky subscribers to access account, billing and other information and services at any time and in any way - including through the Sky set top box, via the internet and using interactive mobile telephone services. These contact centers will provide a resource to support the growth of our e-commerce businesses.

The financial return on this investment is expected through reduced churn and the ability to develop new revenue streams from our subscribers. The cost of handling each call is also expected to fall.

Programming

The Company continues to focus on delivering the most attractive programming available to subscribers, both original and acquired. Successful original productions broadcast during the period included The Villa and Cream on Sky One and the first two projects from Sky Pictures, Milk and Tube Tales, on Sky Premier. Sky recognizes the potential offered by new media and launched `skyrocket' in the autumn, an innovative programming block linked to a co-branded website.

Sky Pictures has secured a theatrical distribution deal under which certain titles will be released in cinemas before being broadcast on Sky Premier. Saving Grace, which won the World Cinema Audience Award in the Sundance Film Festival, will be the first title released under the agreement.

Sky Sports has renewed the contract for the European Golf Tour including the next two Ryder Cup tournaments and has secured the exclusive rights to England's next two winter tours to Pakistan and Australia.

The interactive sports service, Sky Sports Extra, was launched in August. Sky viewers have responded enthusiastically, with more than 36% of the Sky digital audience now watching live Premier League football through the service. Two new camera angles were introduced in December and a fourth - the player cam - in January. On February 5, 2000 Sky Sports extended the interactive viewing experience to the first of England's home games in the Six Nations rugby and it will be used for coverage of the new domestic cricket season.

New Media

Sky is a leading provider of sports, movies and entertainment on television and our strategy is to replicate this success in supplying content through to new media. An amount of (pound)250 million ($406 million) will be invested via Sky New Media Ventures in sky.com and skysports.com over the next twelve to eighteen months.

The Company's strategy will be to combine investment in Sky's existing new media content businesses with new initiatives and investments. In each case the objective is to build cross platform portals driving viewers between the television, internet and the interactive television service, Open.... Sky anticipates making major investment in the sports genre where Sky aims to become the number one sports internet site in the UK within 12 months.

The Company has entered into an agreement with Kingston Communications to form a joint venture to provide a range of broadcast entertainment and high speed internet services to consumers via ADSL within Kingston's area. The establishment and operation of the joint venture is subject to a number of conditions, and completion is expected to take place in the next two months.

BSkyB is also pursuing agreements with BT Cellnet and others to supply Sky content to users of WAP mobile telephones.

The Company has announced today investments in Streets OnLine a leading player in UK internet retailing and Static, an interactive television developer and design consultancy.

Open.... launched on October 12, 1999 and has proved very successful with impressive usage levels. Open.... now has over 450,000 e-mail registrations making it one of the fastest growing e-mail providers in the UK. As more Sky digital subscribers discover the increasing range and quality of services provided on Open.... it will prove a valuable part of the Sky digital proposition as well as an increasingly valuable investment for the Company.

FINANCIAL REVIEW

The results for the six months ending December 31, 1999 reflect significant subscriber acquisition costs associated with the roll-out of digital.

Revenues increased by (pound)96.7 million ($156.9 million) to (pound)849.7 million ($1,378.9 million), up 13% on the comparable period. This was more than offset by a (pound)176.1 million ($285.8 million) increase in costs to (pound)821.9 million ($1,333.8 million) as the Company installed, and invested in the facilities necessary to service, record numbers of new subscribers. The Company made an operating profit of (pound)27.8 million ($45.1 million) compared with (pound)107.2 million ($174.0 million) for the same period last year.

After increased investment in joint ventures, and BiB losses (principally investment in set top boxes), the Company made a loss before taxation of (pound)61.5 million ($99.8 million) compared with a profit of (pound)53.2 million ($86.3 million) in the same period last year. The loss after tax in the period was (pound)48.6 million ($78.9 million) resulting in a loss per share of 2.8 pence (4.5 (cent)), compared with earnings per share of 2.3 pence (3.7 (cent)) for the same period last year.

Revenue

DTH revenues increased by (pound)49.4 million ($80.2 million) (10%) to (pound)535.8 million ($869.5 million) following a 5% increase in average revenue per subscriber and a 5% increase in the average number of subscribers. The digital pay to basic ratio at the period end was 305% compared with analogue at 281%. The average revenue per subscriber remains significantly higher than in analogue with average annual revenue per digital subscriber of (pound)316 ($513) compared with (pound)285 ($462) in analogue.

Wholesale revenue from cable and ONdigital increased by (pound)31.8 million ($51.6 million) in the period to (pound)147.9 million ($240.0 million). The increase in cable was due to an 11% increase in the average number of cable subscribers and a 2% increase in the average revenue per subscriber. The cable pay basic ratio was 124% compared with 145% at December 31, 1998 and ONdigital had an estimated pay basic of around 100%.

Advertising revenue increased by 10% to (pound)113.5 million ($184.2 million). Growth was driven by an increase in pricing and the penetration of UK homes that increased to 31.1% at the end of December compared with 29.7% in December 1998. Since the start of tracking in November 1999, Sky's average share of viewing in digital satellite homes has been almost 50% higher than in average analogue homes.

Costs

Operating costs increased by (pound)176.1 million ($285.8 million) (27%) to (pound)821.9 million ($1,333.8 million).

Programming costs increased by (pound)69.0 million ($112.0 million) (19%) over the period to (pound)435.7 ($707.1 million) million largely due to the increased number of subscribers, more original and acquired programming available on the digital platform and an increase of (pound)40.4 million ($65.6 million) in the cost of sports programming (including the UEFA Cup, The Ryder Cup and Premier League football).

Marketing costs increased (pound)68.3 million ($110.8 million) (62%) to (pound)179.0 million ($290.5 million) in the period due mainly to the substantial cost ((pound)123.9 million) ($201.1 million) of acquiring 699,000 new subscribers. Costs of (pound)120.3 million ($195.2 million) incurred in relation to transition to digital of existing analogue subscribers were offset against the transition provision.

Subscriber related costs increased (pound)27.2 million ($44.1 million) to (pound)99.9 million ($162.1 million) driven by the roll-out of digital requiring additional staff to handle greater call volumes and the cost of issuing new smartcards.

As at December 31, 1999 the Company had over 13,000 employees.

Net debt and interest

An operating cash outflow of (pound)70.8 million ($114.9 million), together with football and new media investments of (pound)26.6 million ($43.2 million), capital expenditure of (pound)22.0 million ($35.7 million) and joint venture funding of (pound)39.9 million ($64.7 million) (of which (pound)32.9 million ($53.4 million) was to BiB) resulted in net debt increasing by (pound)167.3 million ($271.5 million) to (pound)832.2 million ($1,350.5 million). The net interest charge increased by (pound)9.8 million ($15.9 million) to (pound)36.0 million ($58.4 million).

The overall effective tax rate was a credit of 21% as a result of the tax credit on BiB losses and an excess of capital allowances over depreciation.

OTHER

On December 6, 1999 the Company announced the acquisition of a 24% stake in KirchPayTV, operator of the German Premiere World pay television platform, for consideration of DM1.0 billion ($594 million) (to be financed from the issue of new BSkyB shares) and 78 million new BSkyB shares. The acquisition is subject to regulatory clearance. In the three months since its launch at the beginning of October, Premiere World has gained over 320,000 new subscribers, and in addition, 103,000 subscribers have been transitioned from the analogue to the digital service. At December 31, 1999 Premiere World had a total of 2.2m subscribers, over 1.3m of which were digital. In January 2000 Premiere World added a further 80,000 digital subscribers.

On October 15, 1999 Martin Pompadour and Leslie Hinton were appointed, and Bruce McWilliam resigned, as non-executive directors of the Company. Lord Stevenson of Coddenham resigned from the Board of Directors on January 4, 2000.

On January 11, 2000 the OFT announced that it is to fulfil its promise to review the informal undertakings given by the Company to the Director General of Fair Trading, John Bridgeman, in 1996, relating to the terms on which BSkyB supplies cable operators with certain of its channels. BSkyB looks forward to co-operating with the OFT and is hopeful that the review will result in the removal of outdated rules and unnecessary burden on BSkyB. The review is unlikely to be concluded before summer 2000.

OUTLOOK

The strategy for our core business remains to build the digital platform through both new and transition subscribers. As announced today, we will make a sizeable investment in Sky New Media Ventures to develop sky.com and skysports.com. We continue to be encouraged by the level of demand and anticipate continued net subscriber growth in the second half of the year.

BSkyB ADRs (each equal to six ordinary shares) trade on the New York Stock Exchange under the symbol BSY. BSkyB ordinary shares are listed on the London Stock Exchange, and can be accessed on Reuters under the symbol BSY.L, and on Quotron and Bloomberg under the symbol BSY. Additional information is available on BSkyB's home page: http://www.sky.com

     Appendix 1
     Subscribers to Sky Channels
----------------------------------------------------------------------
                 As at 6/30/99       As at 9/30/99      As at 12/31/99

Digital              753,000           1,279,000          2,065,000
Analogue           2,707,000           2,303,000          1,901,000
                   ---------           ---------          ---------
DTH                3,460,000           3,582,000          3,966,000(a)

Cable              3,189,000           3,325,000          3,306,000
ONdigital            204,000             363,000            527,000
Eire                 589,000             591,000            605,000
                   7,442,000           7,861,000          8,404,000
----------------------------------------------------------------------
(a) 4 million achieved during January 2000


Sky DTH Subscribers
----------------------------------------------------------------------
1999/2000           Quarter 1          Quarter 2            Half 1
                  3 m to 9/30/99    3 m to 12/31/99    6 m to 12/31/99

Opening            3,460,000           3,582,000          3,460,000
Net additions        122,000             384,000            506,000
Closing            3,582,000           3,966,000          3,966,000

Churn                   14.2%               10.2%              11.9%
----------------------------------------------------------------------


Sky digital subscribers
----------------------------------------------------------------------
1999/2000           Quarter 1          Quarter 2            Half 1
                  3 m to 9/30/99    3 m to 12/31/99    6 m to 12/31/99

New                  244,000             455,000            699,000
Transitions          287,000             341,000            628,000

New as % of
 gross additions          46%                 57%                53%
----------------------------------------------------------------------

(For tabular results, please contact Taylor Rafferty Associates

at 212-889-4350)