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London - BSkyB will hand out £1bn to placate investors who lost out after News Corp bowed to public fury over a hacking scandal and dropped a bid to take full control of the satellite broadcaster.
BSkyB, whose board on Thursday voted unanimously to keep James Murdoch as its chairman, will return £750m to investors with a share buy-back and a further £253m by boosting the final dividend to 14.54 pence a share.
News Corp has agreed to participate in the buyback, meaning its 39% stake will not change, BSkyB said. Without News Corp's participation in the process, its stake could have crept up, which would have been controversial in the current climate.
The payout was announced on Friday alongside full-year results that beat expectations for sales and profits, although a slowdown in customer additions showed the impact of the weak British consumer economy.
Shares in BSkyB have fallen over 15% since the News Corp bid premium evaporated and the long-simmering phone hacking case erupted this month.
Allegations of hacking at News Corp's British newspapers, in particular reports that journalists accessed the voicemails of murder victims, have triggered a judicial inquiry and calls from some politicians to cap Murdoch's media ownership.
This makes any renewed approach for BSkyB, whose current market value is $20bn, a distant prospect.
BSkyB's appeal to News Corp was highlighted on Friday as the broadcaster reported a better than expected 16% jump in full-year revenue to almost £6.6bn and a 23% rise in operating profit to £1.07bn.
Analysts had expected revenues to come in at £6.45bn according to the average forecast provided by Thomson Reuters StarMine SmartEstimates, while operating profit had been seen at £1.06bn.
"Given the tough environment, we're pleased with our growth this quarter," BSkyB chief executive Jeremy Darroch told journalists on a conference call.
In a sign that its subscribers may be feeling the pinch as the British econony struggles, the company said average revenue per user (ARPU) dipped to £539 per year at the end of the fourth quarter from a rate of £544 in the third.
BSkyB said a technical tax issue was largely to blame for the drop, but its number of TV customers rose by just 40 000, well below the expected 60 000, taking the total TV customer base to 10.2 million.
BSkyB has already frozen subscription prices until next year, and Darroch said he expected the consumer environment to remain difficult. Britain's economy barely grew between April and June, according to figures released this week.
Shares in BSkyB rose 0.6% to 720 pence by 0748 GMT, 20 pence above the price News Corp said it was prepared to pay a year ago but 80 pence below the price BSkyB's independent directors had demanded as a minimum before the deal fell apart.
Analysts said revenues and profits were above their expectations but some saw the weak customer numbers as cause for concern. A few said the buyback, while welcome, was smaller than expected.
The dividend lifts BSkyB's payout for the full year by 20% to 23.28 pence per share, creating a total dividend pot of over £400m of which News Corp, as 39% shareholder in BSkyB, will get about £160m.
News Corp has seen its stock fall more than 10% on fears of reputational damage to the wider group, wiping billions of dollars off its market value and shaking Murdoch senior's grip on the media group.
As well as derailing News Corp's planned buyout of BSkyB, the scandal forced Rupert Murdoch to shut down the 168-year-old News of the World tabloid, ended the careers of two top policemen and rocked the British political establishment.
Asked why BSkyB's board had decided to keep James Murdoch as chairman while investigations by police, a top judge and a parliamentary committee are under way, Darroch said: "It's not for me or for Sky to preach as to the outcome of those."
