BSkyB shares are moving higher despite signs the company is mounting bigger promotions to attract customers.
Helped by news the company had bought back around £2.6m worth of shares on Friday, the company is 7p higher at 703p, with traders also pointing to - seemingly spurious - rumours late last week of possible bid interest.
On the promotions front, analysts at Credit Suisse said:
The most significant recent development in the UK triple play market is Sky now discounting TV and HD in its promotions for the first time in 6 years. We believe these promotions likely represent normal tactical discounting and are probably linked to 1) the upcoming launch of [rival] YouView; 2) the end of the Premier League season; and 3) ongoing economic pressure on pay-TV growth.
Despite these promotions we still believe Sky is very likely to raise headline TV package pricing by 2%-5% on 30 June, effective 30 September.
Meanwhile Bank of America Merrill Lynch dismissed recent talk of interest from US group Comcast, said to be mulling a bid or perhaps the purchase of News International's stake in the satellite business. Analyst Daniel Kerven said:
It was speculated on Friday that Comcast was mulling a bid for Sky. Comcast has since denied the report, saying "This is complete rubbish, speculation and inaccurate."
Merrill also looked at the bidding for the next round of Premier League football rights:
The first round bids for the three seasons of Premier League rights starting in 2013 were due last Friday. The number of games is increasing by 12% with the maximum proportion of games for a single bidder falling from 83% to 75%. The widely expected outcome is for Sky to win 5 of the 7 packages and 116 games, paying 10%-20% more, and for ESPN to win the rest (36 games). Our forecasts assume Sky pays 18% more for the rights versus consensus of around 15%-20% more.
We believe the market view is for Sky to retain the rights and that visibility should be a positive catalyst. However, some investors could use a bounce to reduce positions given concerns on competitive landscape and YouView's second half launch, capping potential upside.
