British satellite TV operator BSkyB is taking a £985m sterling hit to write down its stake in Germany's troubled KirchPayTV, pushing it into a huge first half pre-tax loss.
Britain's number one pay TV operator said concerns over KirchPayTV's future and the ability of its parent company to honour an option to buy back BSkyB's stake in October forced it to write off its 22% holding.
After the charge, BSkyB made a first half pre-tax loss of £1,253m, but the group said it was currently generating positive free cash flow. First half operating profit before goodwill was £70m, compared with £50.6m a year earlier.
BSkyB bought a 22% stake in KirchPayTV in December 1999 but warned last year it was unhappy with the way the company was being run and would probably exercise its option to sell its stake back to Kirch in October this year.
Parent company Kirch is struggling with a mountain of debt, however, due largely to its foray into pay television, and faces the prospect of having to cough up billions to repay debt and meet options to banks and shareholders like BSkyB this year.
On other results for the six months to end December, average revenues per user rose by 11% to £331.
Britain's leading pay TV operator, which is 36% owned by Rupert Murdoch's News Corp, said net digital subscribers rose to 5.7 million at the end of December, a net gain of 218,000 in the quarter. Analysts were forecasting an addition of 214,000.
