BSkyB has signed a new deal with US producer HBO to secure exclusive access to blockbuster shows such as "Game of Thrones" until 2020.
The deal is part of efforts by the pay-TV provider to broaden its offering with increased content and services to tie in customers after BT encroached on its traditional stronghold of sports coverage last year.
The investment in products, marketing and increasingly expensive rights to televise English Premier League soccer squeezed operating profit in Sky's first half but drove a 7.6% rise in revenue, the company said today.
The 8% drop in operating profit was less than the market expected.
Chief executive Jeremy Darroch, while acknowledging that the consumer environment remains challenging, said that more people were joining Sky and taking more products, such as high-definition (HD) television, on-demand movies and broadband.
"We have seen strong demand across the board," he said.
Subscribers took 873,000 new products in the Christmas quarter, Sky said, up 42% year on year and beating analyst expectations of 731,000.
One million internet-connected HD boxes were installed in the quarter, making Sky's connected TV platform the biggest in Britain and Ireland with 4.4 million customers.
Analysts said that Sky's exclusive HBO deal calmed concerns that BT's ambitions would widen to include movie andentertainment content.
The strength of demand for connected boxes was another surprise.
"This may actually depress earnings in the near term, but the implications operationally are significant," analystss aid, noting that internet-connected boxes drove transactions on the Sky platform and lowered the number of subscribers leaving the service.
Darroch declined to reveal the cost of the deal with HBO, which is owned by Time Warner, but a report in The Guardian newspaper put it at £275m sterling.
Sky reported operating profit for the six months to December 31of £595m, ahead of market forecasts for £586m. Revenue rose by 7.6% to £3.75 billion, broadly in line with expectations.
The company also increased its interim dividend by 9.1% to 12 pence a share