SKYB notched up another 95,000 net new subscribers in the three months to the end of March, leaving the satellite broadcaster well on course to hit its target of eight million customers by the yearend.

The total currently stands at 7.7 million.

Chief executive James Murdoch's What Do You Want to Watch advertising campaign still produced results even in the quietest quarter of the year after the big run-up to Christmas.

The cost of winning customers continues to rise, with above- theline marketing costs for the year to June likely to be between 40% and 50% higher than last year.

However, they actually fell by 47% year-on-year in the quarter.

Although Sky did not give an update on the cost of gaining each new customer - which had risen by 11% to Pounds 230 at the half year - the fact that the gross margin rose by 3.2 percentage points to 19.4% was taken as a good sign by analysts.

Headline profit for the nine months to the end of March jumped 45% to Pounds 539 million, with turnover up 10% to Pounds 2.96 billion.

Earnings per share were 51% higher at 19.9p.

Murdoch said: "Continued focus on our strategy is returning strong subscriber growth, a good mix of customers, growth in Sky Plus and Multiroom and substantial profit and cashflow.

"We remain focused on and energetic-in pursuing our long-term growth plans."

Once again, more subscribers switched to the Sky Plus service, with a net 128,000 new subscribers, and the number of households with two or more boxes doubled from 270,000 to 563,000.

The average spend by customers dipped during the quarter from Pounds 386 a year to Pounds 382, with Pounds 1 of the fall caused by subscribers downgrading their packages after Christmas. The other Pounds 3 is a result of less spending on Sky Active and SkyBet.

The What Do You Want to Watch campaign launched last October, continued to attract new viewers from beyond Sky's traditional audience of sports and movie lovers.

The group also continued its policy of not charging new customers for installing satellite dishes and set-top boxes.

Advertising revenues rose by 9% to Pounds 242 million, marginally ahead of the 8% rise for the whole UK television sector over the nine months.

SkyBet's takings shot up by 40% to Pounds 186 million with slot machines and games such as roulette driving up gross margins.

(c)2005. Associated Newspapers Ltd.. Provided by ProQuest Information and Learning Company. All rights Reserved.