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Company Watch - BSkyB

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Introduction

COMPANY WATCH The company that I have chosen that is in the Ftse 100 is BSkyB and the rival company to BSkyB that I have chosen is Cable & Wireless (C & W). I will be monitoring these companies over four weeks and recording and analysing their share prices as well as the Ftse 100. I will be using The Times newspaper to obtain share prices and business information regarding the companies and the Ftse. HISTORY OF BSKYB In 1989 Sky introduced satellite television to the UK with four channels. By 1990 sky reached one million homes and merged with British Satellite Broadcasting (BSB) to form BSkyB. In 1991 Sky and BSB streamline their channels into five separate channels. Between 1992 and 1993 BSkyB secures exclusive rights to live FA Premier League football coverage and Sky Multi-Channels launch with a package of 14 channels at basic subscription level. In 1994 five more channels are introduced and Sky announces �13 million investment in British films including a major output deal with British Screen. Also in 1994 17% of BSkyB is floated on the UK and US Stock Exchanges. By 1995 BSkyB enters the FTSE 100 index, six more channels are added and subscribers exceed five million. In 1996 BSkyB secure a contract for FA Premier league football until 2001 season. ...read more.

Middle

But over the past year the value of the Ftse has decreased dramatically. On Wednesday 18th September the Ftse dropped below 4000 to 3865.4, which was its worst close since July 24th. This has been due to heavy losses by leading financial stocks and fears over war with Iraq. Also the falling UK interest rates have left British investors worried. On Friday 20th September the Ftse reached a six-year low of 3860.1 and continued to drop until Tuesday 24th September to 3671.1 which was the lowest result that I recorded over the four week period. Regarding this information the Ftse 100 has only dropped -0.023% over the four-week period. But the highest percentage change was -9.2% between Monday 16th September and Tuesday 24th September. For BSkyB the share value has also fallen and the percentage change over the four-week period was -0.086%. The highest recorded value over this period was 569.0 on Monday 16th September and the lowest was 458.0 on Wednesday 9th October. The BSkyB graph shows a very similar shape as the Ftse 100 graph as it relies on the Ftse for changes in share prices. The BSkyB year high was 942 and the year low was 448. If I had 1000 shares in BSkyB on Monday 16th September they would be worth �5690.00 but on Friday 11th October they would be worth �5200.00, which is a �490 drop in value. ...read more.

Conclusion

> All competitors use cable so no satellite dish is required. EVALUATION There are numerous reasons for the falling prices of shares which have affected the Ftse, BSkyB and Cable & Wireless. Over the past five years shares have been over valued. So now the prices of shares are falling to compensate and to revalue shares to a realistic level. There are fears of potential wars especially with recent affairs with Iraq and fears from further terrorist activity from September 11th. Also rising oil prices has affected the prices of shares. At the moment the American economy is in recession which affects the UK economy. There are also fears that the UK economy may follow the recession. In the UK interest rates have been falling which has encouraged more borrowing. As a result more and more people are investing in housing which has resulted in rising property prices and falling share prices. Overall BSkyB has fared better than Cable & Wireless. BSkyB has many opportunities for the future including further growth into Europe, BSkyB also has many advantages over the competitors. BSkyB is the biggest provider of digital multi-channel television in the UK and is growing fast with increasing numbers or subscribers. There are 6.1 million subscribers and the target of 7 million by 2003 is well on track. BSkyB make on average �347 revenue per subscriber which is up 11% and BSkyB profits have increased 20% year-on-year, which has generating positive free cash flow. - 1 - Anit Patel COMPANY WATCH 14/10/02 ...read more.

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