In BSkyB’s “very good” fiscal first half and...

resulted in our highest rate of organic product growth in seven quarters,” characterized by “strong demand across the board,” Darroch said. During Q2, Sky surpassed “the milestone” of 5 million HD customers, marking “a good quarter for TV,” Darroch said. “But we also had another good quarter in home communications, where customers continue to switch from other providers to save money with Sky.” The company estimates that 36 percent of its customer base now subscribes to its “triple play” offering of TV, phone and broadband, “and in the last 12 months alone, we've added more than 900,000 broadband customers,” Darroch said. Sky is “particularly pleased” with the return on its investment in new services, Darroch said. “After a record quarter of growth in connected boxes, Sky is now Britain’s and Ireland’s biggest connected TV platform,” he said. The company installed more than a million connected set-tops in Q2 for an average of 11,000 a day, reaching a total base of 4.4 million by the end of December, he said. “We're finding that customers really love the benefits that come with our connected box.” For example, “on-demand usage” more than tripled year on year, including a record 12.5 million downloads “in the Christmas week alone,” he said. The number of movie rentals through Sky Store also “has doubled, due to the popularity of a number of titles,” he said. “We're starting to see the benefits of this investment flow through to the business. Connected customers are more loyal, more willing to spend more money with Sky and they're upgrading to higher-tier packages. They're also 40 percent more likely to recommend Sky to their friends.” For 2014 and beyond, “we feel very good about the opportunities for our business,” Darroch said. “We see significant headroom for growth in our core subscription products. By innovating across different platforms, we're also opening up the market and creating more ways to reach customers than ever before.” For example, Sky thinks it can “build new revenues” through Sky Store by “accelerating the move away from physical DVDs to digital formats,” he said. “Taken together, these present a significant growth opportunity, and we've got a strong set of plans in 2014 to begin to exploit it.” The company’s “first priority” is extending its “on screen” leadership, he said. On that score, its new expanded partnership with HBO is “a big step forward,” he said. The agreement extends Sky’s role as the exclusive distributor of HBO programming in Britain and Ireland “through to the end of the decade,” he said. The two companies also have pledged to “co-produce major new cinematic drama series,” he said. Darroch sees no reason why Sky can’t build its triple-play subscription penetration higher than the 36 percent of the customer base that it is today, he said in Q-and-A, though conceding penetration growth has slowed in recent quarters. “If you look at the cable network in the U.K., they're already achieving penetrations north of 60 percent, so those sorts of numbers will be good things to shoot for.”