BSkyB's launch into broadband leaves the City unimpressed
The City gave a lukewarm reception to Sky's much-anticipated ?400m launch into broadband, triggering fears of a price bloodbath and sending shares in the broadcaster and its rivals lower. Chief executive James Murdoch said he plans to invest about one-sixth of Sky's operating profit over the next two years, and ?400m over three years, until the broadband business reaches profitability in 2010.
Mr Murdoch claimed Sky's move into broadband would boost customer loyalty, enable a video-on-demand from late 2007, and allow the company to tap new revenue streams such as online search-based advertising.
However, investors pushed Sky shares 23.5 lower to 541p on fears about the heavy start-up costs. "The market has clearly been taken aback by the scale of BSkyB's ambition," the Numis media team said in a research note.
