BSkyB plans to provide more and cheaper ways to access its premium content and Internet services to counter cash-rich rival BT's offer of free Premier League football to broadband customers.
The group, which has dominated pay-TV in Britain since Rupert Murdoch launched it in 1989 and reaches 10 mln homes, said it would invest about 70 mln pounds ($100 mln) in the next financial year to improve on-demand programming and connectivity.
BSkyB said it will promote its Internet-connected set-top boxes which provide wifi in the home and allow users to view content on their televisions as well as providing access on laptops and tablets when they are out.
The company also announced full-year results in line with or above analysts' forecasts, a 500-mln-pound share buy-back and an 18% dividend hike to try to temper investor concern over BT's entry into the market.
"This morning's results and accompanying commentary provide a clear reminder of BSkyB's underlying strengths including an unrivalled content proposition, loyal subscriber base, very strong cash flow and proven marketing skills," analysts at Westhouse said.
"We believe these characteristics will stand it in good stead when facing down growing competition for new customers, particularly from BT."
Shares in BSkyB – known for years for promising "jam tomorrow" due to its ever-present investment needs – dropped 3.3%. Its stock fell sharply on May 9 when BT announced its plans for the free sports offering.
The move is consistent with the group's historical approach of providing technology to enable customers to pay increasing amounts to access premium content such as sports and movies.
"The main concern will be the additional investment, but we see this as a pull-forward of existing plans," Citi analysts said in a note. "And at any rate, this may not even impact consensus earnings per share in 2014 given the buyback. We see this as a strong set of results and rate BSkyB Buy."
Adjusted operating profit for the year was up 9% to 1.3 bln pounds, helped by an increase in the amount customers are willing to pay for the service to an average annual amount of 577 pounds.
