British Sky Broadcasting to Beef Up Internet Presence

It will spend about $400 million.
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Updated from 4:05 p.m. EST

Shares of

British Sky Broadcasting

(BSY)

surged Wednesday on news the company will spend about $400 million to beef up its Web presence.

The company, the Britain's leading cable operator, also posted strong subscriber growth for the quarter ended Dec. 31.

BSkyB shares jumped 35 1/16, or 23%, to close at 189. Shares of media giant

News Corp.

(NWS) - Get Report

, which owns 40% of BSkyB, jumped 2 15/16, or 5%, to close at 58. News Corp. posted earnings in line with expectations after the market closed.

BSkyB said it will develop

sky.com

and

skysports.com

over the next 18 months. The company's strategy will be to combine investment in its existing new-media content with new initiatives. "Sky aims to become the No. 1 sports Internet site in the U.K. within 12 months," the company said.

Commerzbank AG

in London upgraded BSkyB to hold from sell on the news. "This investment and the excellent subscriber growth rate are likely to add further impetus to the excellent share performance," the bank said in a note Wednesday. Commerzbank has not done any underwriting for BSkyB.

BSkyB posted its best-ever performance in terms of new subscribers in the three-month period ended Dec. 31, adding 543,000 new customers during that time.

News Corp. said its earnings fell to $252 million, or 25 cents a diluted share, compared with $339 million, or 34 cents a share, in the year-earlier period.

Peter Chernin, president and chief operating officer of News Corp., told analysts on a conference call that the company has "no deals approaching the size of

America Online

(AOL)

-

Time Warner

(TWX)

." America Online is acquiring Time Warner in a deal valued at about $150 billion. "As big as our appetites may be, they're not that big," he said. "We don't have anything that's in the pipeline."

Fox Entertainment

(FOX) - Get Report

, which is 83%-owned by News Corp., beat expectations by 5 cents a share.

Fox, one of the largest entertainment conglomerates in the world, posted second-quarter earnings of $94 million, or 13 cents a diluted share, compared with $105 million, or 17 cents a share, last year. Analysts surveyed by

First Call/Thomson Financial

had estimated earnings of 8 cents a share. Fox shares closed up 1 11/16, or 6%, at 30.